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In Search of a Better Life: Self-Control in the Ethiopian Labor Market

May 7, 2019

MC 10-100

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  • In this seminar a paper is presented that investigates whether present bias correlates with savings and job search behavior in a population of low-skill workers in Ethiopia.

    I conduct a field experiment with 460 women who begin employment in the ready-made garment industry. Most are rural-urban migrants without work experience for whom the job represents a stepping stone into the labor market. Almost all workers plan to use their jobs to save money and to look for higher-wage employment, but many fall short of their intentions. I propose self-control problems as a candidate explanation. I elicit a measure of present bias in a tightly-controlled experiment and match results to high-frequency survey data that I collect over a period of three months. Present bias is a significant predictor of job search effort, controlling for liquidity and a broad range of covariates. Present-biased workers spend 57 percent less time on job search per week.

    As a result of reduced search, present-biased workers generate fewer offers and stay in their jobs significantly longer. In contrast, I find no significant correlation between present bias and savings behavior. I discuss implications for the design of commitment devices in this context.

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    CHRISTIAN JOHANNES MEYER

    PhD Candidate in Economics European University Institute

    Christian Johannes Meyer is a PhD Candidate in the Department of Economics at the European University Institute. In September 2019, he will join the University of Oxford as a Postdoctoral Prize Research Fellow at Nuffield College and the Department of Economics. Christian is currently also a Labor Economist with the World Bank’s Social Protection & Jobs Global Practice, where he co-leads a research program on industrial labor in Ethiopia. Christian is a behavioral and experimental economist with research interests at the intersection of development and labor economics. Before his PhD, Christian worked with the World Bank’s Development Research Group, the Center for Global Development, and the UN Conference on Trade and Development.

  • DIME is a World Bank-wide program to generate knowledge on the effectiveness of development policies. Working across 18 thematic areas, DIME collaborates with 300 agencies in 72 countries to improve the effectiveness of policies and programs and strengthen country capacity for real-time evidence-based policy-making. More »

EVENT DETAILS

  • TIME: 12:30PM to 2:00PM
  • LOCATION: MC 10-100, World Bank Main Complex
  • CONTACT: Silvia Velez Caroco
  • svelezcaroco@worldbank.org