Poor workers in developing countries generally work in harsh and often unsafe conditions. These conditions have adverse psychological, cognitive, and physical impacts on workers that contribute to keeping them and their families in poverty (Haushofer and Fehr, 2014). While there is significant evidence on the extent to which wages influence workers’ decisions about where to work, much less is known about how other aspects of working conditions factors into these decisions for poor workers.
The effects of poor working conditions are readily apparent for workers in Bangladesh’s ready-made garment (RMG) sector. The RMG sector in Bangladesh has received extensive international attention following the 2013 Rana Plaza building collapse that killed 1,150 garments and injured thousands of others. The Rana Plaza example is an unfortunately not-so-extreme example of the information asymmetry and related imbalance of power that often characterize relationships between RMG factory owners and workers in Bangladesh.
This research entails an information randomized-control trial (RCT) that alleviates this market failure and studies the effects of information about factory safety on workers’ decisions about where to work as well as their reported levels of workplace- related perceived risks, stress, trust. The research tests the hypothesis that information asymmetry about safety in the workplace constrains workers’ abilities to make optimal decisions about where to work. In the study, the treated group of workers is provided with the results of safety audits conducted of their factory and numerous factories nearby. The RCT tests whether this information effects workers’ decisions about where to work and to refer family and friends to work. It also tests whether the information effects workers’ perceived risks at work, stress and anxiety at work, and trust in managers.
Results and Policy Implications
The results of this research will have important health and labor policy implications for developing countries. If improved information about factory safety affects workers’ decisions about where to work and/or where to refer family and friends to work, it would suggest that governments in developing countries could have a role to play in addressing this market failure. Furthermore, evidence about the effects of improved information about safety on workers’ mental health will also provide useful inputs to policymaking. The policy implications of this research will be determined and fully characterized after the experiment is completed.