The effect of financial goals and incentives on labor. An experimental test in an online market.

by Johnson, David and Weinhardt, Justin

Empirical studies investigating work motivation over time find people with fluctuating wages work more on days when their wage rate is lower compared to when wages are higher. The authors of these studies theorize individuals use daily income goals and stop working once they reach their goal. This study involves assignment and manipulation of financial goals in an online labor market that is nearly frictionless. Workers can quit at any time and can start jobs posted by competing employers almost instantly. Results, with pooled data, indicate financial goals do not lead to workers stopping work once they reached their goals and there is no significant wage related crowding out. However, when we separate the sample by western and non-western workers, we find production by western workers is greatest in treatments with goals and low incentives. This effect is absent in non-western workers.

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