We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. We experimentally establish a new promotion criterion that links promotions to performance for the lowest tier of health workers and introduce variation in perceived pay progression by revealing to them the salary of their supervisors. We find that meritocratic promotions lead to higher worker productivity and that this effect is driven mainly by workers who expect a steep pay progression 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.
This working paper is also available as CEPR Discussion Paper 15837.