Competition and Social Identity in the Workplace: Evidence from a Chinese Textile Firm

Abstract

We study the impact of social identity on worker competition by exploiting the exogenous variations in workers' origins and the well-documented social divide between urban resident workers and rural migrant workers in large urban Chinese firms. We analyze data on weekly output, individual characteristics, and coworker composition for all weavers in an urban Chinese textile firm between April 2003 and March 2004. The firm's relative performance incentive scheme rewards a worker for outperforming her coworkers. We find that a worker does not act on the monetary incentives to outperform coworkers who share the same social identity, but does aggressively compete against coworkers with a different social identity. Our results highlight the important role of social identity in overcoming self-interest and enhancing intergroup competitions.