Competition and social identity in the workplace: Evidence from a Chinese textile firm

We study the impact of social identity on worker competition by exploiting the well-documented social divide between urban resident workers and rural migrant workers in urban Chinese firms. We analyze data on weekly output, individual characteristics, and coworker composition for all weavers in an urban Chinese textile firm during a 53-week period. The firm adopts relative performance incentives in addition to piece rates to encourage competition in the workplace. We find that social identity has a significant impact on competition: a weaver only competes against coworkers with a different social identity, but not against those sharing her own identity. The results are mainly driven by urban weavers competing aggressively against rural coworkers. Our results highlight the important role of social identity in mitigating or enhancing competition.