Alleviating financial strain to drive productivity: Evidence from India


Published 01.04.20
Photo credit:
Well-Bred Kannan/flickr

Does easing the financial stress of short-term workers by paying them earlier lead to productivity improvements?

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The mental strain of living in poverty undoubtedly causes a significant psychological load on the poor. Yet, policymakers and academics have often neglected the effect of such stress as a source of lower productivity amongst poorer workers. An innovative experiment in rural India targeted alleviating financial stress on short-term workers and fascinatingly, found a substantial increase in productivity for workers who have their financial strain eased by receiving part of their salary mid-way through their contract.