Conflicts between management and workers are common in newly industrializing countries. Combining ethnographic, survey and administrative records from a Bangladeshi sweater factory, we study how workers responded when management laid off a quarter of the workers following a period of labor unrest. After the unrest, the factory experienced a substantial drop in productivity. Among surviving workers, those who likely had strong social connections - friends - among fired co-workers suffered relatively larger declines in productivity. Additional evidence on potential mechanism indicates a deliberate shading of effort to punish the factory's management.
Robert Akerlof, Anik Ashraf, Rocco Macchiavello and Atonu Rabbani
19 January 2026 Paper Number POIDWP135
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