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States and aid agencies use employment programs to rehabilitate high-risk men in the belief that peaceful work opportunities will deter them from crime and violence. Rigorous evidence is rare. We experimentally evaluate a program of agricultural training, capital inputs, and counseling for Liberian ex-fighters who were illegally mining or occupying rubber plantations. 14 months after the program ended, men who accepted the program offer increased their farm employment and profits, and shifted work hours away from illicit activities. Men also reduced interest in mercenary work in a nearby war. Finally, some men did not receive their capital inputs but expected a future cash transfer instead, and they reduced illicit and mercenary activities most of all. The evidence suggests that illicit and mercenary labor supply responds to small changes in returns to peaceful work, especially future and ongoing incentives. But the impacts of training alone, without capital, appear to be low.

Research Summary: Firms exhibit heterogeneity in size, productivity, and internal structure, and this is true even within the same industry. Our paper provides evidence of a link between an organization's culture-specifically the trust environment-and its level of specialization. We show experimentally that exogenously-imposed culture endogenously leads to variation in organizational form. We prime trust and demonstrate that the level of trust within an organization affects division of labor and consequently productivity in nonhierarchical teams. This evidence is consistent with a cross-country link between trust and the division of labor that we observe in data from the European Social Survey. Managerial Summary: Firms vary among many dimensions such as culture and internal organization even within the same industry. Trust is one component of corporate culture that is crucial for cooperation within organizations. In this paper, we show that the trust dimension of corporate culture can affect firm performance through internal structure, in particular the degree of division of labor. Using evidence from a game-theoretic model, a lab experiment, and country-level data, we show that an increase in trust leads to increased worker specialization. Our results suggest that increasing trust in work environments where division of labor is beneficial is one way to boost team productivity. K E Y W O R D Sculture, division of labor, experiments, organizational structure, trust

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.