DP15837 Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector

Author(s): Erika Deserranno, Gianmarco León-Ciliotta
Publication Date: February 2021
Keyword(s): Meritocracy, Pay Progression, promotions, Worker productivity
JEL(s): D73, J31, M51, M52
Programme Areas: Labour Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15837

We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. The experiment creates exogenous variation in meritocracy by linking promotions to performance and variation in perceived pay progression among the lowest tier of health workers. We find that meritocratic promotions lead to higher productivity, and more so when workers expect a steep pay increase. However, when promotions are not meritocratic, increasing the pay gradient reduces productivity through negative morale effects. The findings highlight the importance of taking into account the interactions between different tools of personnel policy.