Individuals of different abilities and skill sets are differentially suited to different types of jobs. A poor match between workers and jobs is therefore likely to reduce productivity and economic growth. One potential reason for such mismatch is “statistical discrimination” among employers; that is, making hiring and promotion decisions based on easily observable characteristics rather than individual-specific assessments (Altonji and Pierret, 2001; Altonji, 2005). The low social mobility observed in most low-income countries suggests that the degree of mismatch between individuals and positions may be worse in societies where labour markets are less developed. If so, part of the reason may be that a channel through which ability is revealed to employers – on-the-job productivity – is shut off for large segments of the population.
The researchers propose to run a field experiment at a factory in Liberia to estimate the effect of limited observability of worker ability and employer statistical discrimination on (1) the efficiency with which jobs are allocated, (2) firm productivity, and (3) the career effects of obtaining a job.
The output from this project could have significant policy implications for efforts aimed at increasing social mobility and reducing the misallocation of talent in poor countries. The results will, for instance, speak to the likely productivity gains from trainee programs, and to possible trade‐offs facing social enterprises.
