When job contracts prevent productivity gains from new technology

In his survey of soccer-ball producers in Pakistan, Columbia University’s Eric Verhoogen describes less-obvious hurdles to adoption of more efficient technologies—even when said technology is free to use and significantly cheaper than existing methods.  The chief culprit?  A misalignment of incentives between production-line workers paid on a piece-rate basis, and management staff who rely heavily on production workers to make technology recommendations.  Production-line workers cared more about speed than reducing waste, so management was kept in the dark about the new technology’s benefits, leading to low adoption rates.
By Christophe Domingue, HKUST Institute for Emerging Market Studies

This video interview was conducted during the 3rd Annual Conference in International Economics on June 12-13, 2015, co-organized by the HKUST Institute for Emerging Market Studies (http://iems.ust.hk) and the Department of Economics at the Hong Kong University of Science and Technology.