Vilfredo Pareto Research Seminar
 Achyuta Adhvaryu

Absenteeism, Productivity, and Relational Contracts Inside the Firm

Achyuta Adhvaryu, Assistant Professor of Business Economics and Public Policy
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Maison de la paix (Geneva) Room S5, Petal 1

The Vilfredo Pareto Research Seminar is the Economics department's weekly seminar, featuring external speakers in all areas of economics.

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As part of the Vilfredo Pareto Research Seminar series, the International Economics Department at the Graduate Institute is pleased to invite you to a public talk given by Prof. Achyuta Adhvaryu, presenting Absenteeism, Productivity, and Relational Contracts Inside the Firm, coauthored with Jean-Francois Gauthier, Anant Nyshadham, and Jorge Tamayo)

Abstract: The goals of this paper are to understand how firms deal with large and often unpredictable fluctuations in worker absenteeism, and to study the resulting implications for productivity. Using longitudinal production data from a large ready-made garment firm in India, we show that absenteeism in excess of 10 percent substantially decreases line productivity. Managers imperfectly smooth labor fluctuations by lending and borrowing workers in a manner consistent with relational contracting. Managers trade actively with only 1 to 2 partners, meaning that many potentially beneficial trades are left unrealized. Simulations show that a centralized, factory-wide worker allocation system would improve productivity by 2 to 3 percent, which is roughly equivalent to a policy that lowers daily absenteeism by five percentage points. 

Achyuta Adhvaryu is Assistant Professor of Business Economics and Public Policy at the University of Michigan. His research focuses on health and healthcare access in developing country contexts, including the development of sustainable business models for healthcare delivery to low-income populations, and examining the determinants and consequences of mental health in low-income contexts where mental health care is limited.