(with M. Shakil Ahmed and Rachel Heath)
This paper assesses the possibility that search and information frictions around wages and amenities in their local labor markets limits workers’ awareness of employers and biases their beliefs, reducing their mobility and ability to negotiate wage and amenity improvements, and constraining job quality in the context of developing country labor markets. We conduct a clustered field experiment with 2,860 Bangladeshi garment workers over 18 months. We provide information about job vacancies (from a panel of 1,702 HR managers), scorecards of employer wage and amenity rankings (from a representative household survey of garment workers), or both. We find that workers have very low knowledge of local employers and systemically misperceive their employer’s position in the local wage and amenity distributions. Providing vacancies information increases the accuracy of workers’ beliefs and improves their perceived outside options, increases mobility by 30% in the short-run, and wages by 16% in the longer run, with no decline in amenities or increase in commute time. Treatment workers are no more likely to move to firms listing vacancies, suggesting that the key channel is beliefs and information about outside options. Together, these results are consistent with workers’ limited information and biased beliefs generating monopsony power for employers. Providing the scorecard increases the accuracy of workers’ beliefs but not their perceived outside option, it has no effects on mobility, amenities, or commute time. It does, however, increase indicators of workers’ willingness to demand improvements from their employer. The evidence from this arm suggests that increasing accuracy of workers’ beliefs about the firm wage and amenity distributions is not sufficient to counteract monopsony power in such settings.