Hunger for profit: how food delivery platforms manage couriers in China

How do food delivery platform firms, such as Meituan (operated by Tencent) and Ele.me (owned by Alibaba), manage couriers through service contracting rather than formal employment? How do couriers experience control and autonomy at work? Using observation and interviews, the author finds that a combination of data-driven surveillance systems and customer feedback mechanisms are incentivizing workers’ efforts. Corporate utilization of both manual and emotional labor is critical to realizing profits. Individual freedom is framed in a way that crowdsourced couriers are not required to work a minimum amount of time. Flexibility enabled by the algorithmic management, however, cuts both ways. When there is less demand, the platform corporations automatically reduce their dependence on labor. With variable food orders and piece rates, workers’ minimum earnings are not guaranteed. In the absence of Chinese legal protections over the fast-growing food delivery sector, informal workers are desperately struggling for livelihood.◊

Wage Differences Matter: An Experiment of Social Comparison and Effort Provision when Wages Increase or Decrease

Wage rates, efficiency wages, and gift exchange in a labor market are all crucial aspects in regard to designing contracts to ensure high effort from workers. We extend this literature by discussing the relationship between known differences in wages (social comparison) and workers’ effort provision. We conduct an experiment in which subjects perform effort tasks for piece-rates. All subjects are paid the same wage rate in the first half of the experiment, but in the second half are paid different wage rates; the primary variable we study is the information about others’ wage rates given to a subset of subjects. We find that subjects’ efforts respond strongly to information about others’ wages. Such findings have implications for contract structuring for workers.

Peers and Motivation at Work: Evidence from a Firm Experiment in Malawi

This paper studies workplace peer effects by randomly varying work assignments at a tea estate in Malawi. We find that increasing mean peer ability by 10 percent raises productivity by 0.3 percent. This effect is driven by the responses of women. Neither production nor compensation externalities cause the effect because workers receive piece rates and do not work in teams. Additional analyses provide no support for learning or socialization as mechanisms. Instead, peer effects appear to operate through “motivation”: given the choice to be reassigned, most workers prefer working near high-ability co-workers because these peers motivate them to work harder.

Individual incentives and workers’ contracts: evidence from a field experiment

We present evidence on the operation of incentive pay from a field experiment in Pakistan, looking at piece rates and pay based on rank achieved in a tournament. Importantly, some workers are in contracts ‘tying’ them to the employer for several picking seasons; others are ‘untied’, in the sense of being employed for only the current season. We find that incentive pay (of either type) improves productivity by 30%, on average, but that there are important differences across the types of workers: in particular, tournament incentives are less effective amongst the tied workers. We suggest that our main results have implications for tournament theory and the design of incentive pay schemes, particularly with regard to the fact that they may discourage some workers and, thus, reduce incentives.

Asymptotic efficiency of the proportional compensation scheme for a large number of producers

We consider a manager who allocates some fixed total payment amount between N rational agents in order to maximize the aggregate production. The profit of i-th agent is the difference between the compensation (reward) obtained from the manager and the production cost. We compare (i) the normative compensation scheme where the manager enforces the agents to follow an optimal cooperative strategy; (ii) the linear piece rates compensation scheme where the manager announces an optimal reward per unit good; (iii) the proportional compensation scheme where agent's reward is proportional to his contribution to the total output. Denoting the correspondent total production levels by s*, ? and s? respectively, where the last one is related to the unique Nash equilibrium, we examine the limits of the prices of anarchy AN = s*/s?, A'N = ?/s? as N ? ?. These limits are calculated for the cases of identical convex costs with power asymptotics at the origin, and for power costs, corresponding to the Coob-Douglas and generalized CES production functions with decreasing returns to scale. Our results show that asymptotically no performance is lost in terms of A'N , and in terms of AN the loss does not exceed 31%.

Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan*

This article studies technology adoption in a cluster of soccer-ball producers in Sialkot, Pakistan. We invented a new cutting technology that reduces waste of the primary raw material and gave the technology to a random subset of producers. Despite the clear net benefits for nearly all firms, after 15 months take-up remained puzzlingly low. We hypothesize that an important reason for the lack of adoption is a misalignment of incentives within firms: the key employees (cutters and printers) are typically paid piece rates, with no incentive to reduce waste, and the new technology slows them down, at least initially. Fearing reductions in their effective wage, employees resist adoption in various ways, including by misinforming owners about the value of the technology. To investigate this hypothesis, we implemented a second experiment among the firms that originally received the technology: we offered one cutter and one printer per firm a lump-sum payment, approximately a month’s earnings, conditional on demonstrating competence in using the technology in the presence of the owner. This incentive payment, small from the point of view of the firm, had a significant positive effect on adoption. The results suggest that misalignment of incentives within firms is an important barrier to technology adoption in our setting.