Information asymmetries make contracting difficult within firms. Standard principal-agent theory predicts that monitoring should unambiguously raise workers’ effort. I test this prediction using a field experiment with Liberian trucking companies. Results show that drivers who are experimentally monitored provide more effort on average. However, a key finding is that this effect is heterogeneous across drivers: some drivers provide less effort as a result of monitoring and managers are therefore reluctant to monitor them. I discuss why this might be and show that decreasing effort may be a way for drivers to retaliate against the manager’s decision to monitor them.
Evidence suggests that many firms in poor countries stagnate because they cannot access growth-conducive markets. We hypothesize that overlooked informational barriers distort market access. To investigate, we gave a random subset of medium-sized Liberian firms vouchers for a week-long program that exclusively teaches “sellership”: how to sell to corporations, governments, and other large buyers. Firms that participate win three times as many formal contracts a year later. The impact is heterogeneous: informational sales barriers bind for about a quarter of firms. Three years post-training, these firms continue to win desirable contracts, are more likely to operate, and employ more workers.
Work in Progress:
- “Is Liberia Getting Globalized? Estimating Intra-national Trade Costs in Liberia”
- “Fraud Risks and Customs Bonded Warehouse in Tunisia”, with Lotfi Ayadi and Gaël Raballand, Global Trade and Customs Journal (2015) 10, Issue 11/12, pp. 417-425.
“The Trucking Industry and the Price of Commodities in Liberia”, Chapter for Liberia Development Conference Anthology: Engendering Collective Action for Advancing Liberia’s Development (2017), Monrovia, Liberia: USAID/Liberia, Embassy of Sweden and University of Liberia: pp. 341-352.