Reputational Consequences of Labor Coercion: Evidence from Assam's Tea Plantations

Abstract

The right to coerce an employee is seen as advantageous to employers. However, if coercion gives employers a bad reputation, workers may be harder to recruit. We study a unique setting in Assam's tea plantations in the 19th century, where migrant workers were recruited under two different indentured contracts, one of which was more coercive, and gained notoriety in the national press and policy circles. Using newly collected panel data on annual migration flows to seven districts over the period 1883–1900, we find that the response of migration to increased demand for labor, proxied by a rising tea price, was lower for the contract that had a bad reputation. Workers migrated under the more coercive contract only when uninformed or misled about the terms of their employment. We identify the effect of information flow by distinguishing between recruiters with and without social connections with the workers.