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

American Economic Review: Insights

ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)

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

  • Erika Deserranno
  • Philipp Kastrau
  • Gianmarco León-Ciliotta
American Economic Review: Insights (Forthcoming)

Abstract

We study promotion incentives in the public sector through a field experiment with the Ministry of Health in Sierra Leone. The experiment introduces exogenous variation in the meritocracy of promotions from health worker to supervisor positions and in health workers’ perceptions of pay progression upon promotion. Ten months later, our findings reveal that enhancing the meritocratic nature of promotions leads to a 22% increase in health workers’ productivity. Greater perceived pay progression in a meritocratic system boosts productivity by 23%, whereas in a less meritocratic system, it decreases productivity by 27%. This reduction is consistent with a negative morale effect.

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