Unrest, layoffs, and productivity at a Bangladeshi sweater factory

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.