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

We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. The experiment creates exogenous variation in meritocracy by linking promotions to performance for the lowest tier of health workers and in perceived pay progression by revealing to them the salary of higher-tier workers. We find that meritocratic promotions lead to higher productivity for workers who expect a steep pay increase and those who are highly ranked in terms of performance. When promotions are not meritocratic, increasing the pay gradient instead reduces worker productivity through negative morale effects. The findings highlight the importance of taking into account the interactions between different tools of personnel policy.&nbsp