Behavioral barriers

• Status Quo Bias: This is people's tendency to maintain the current state of affairs, which is used as a point of reference. Any change in this regard is perceived as a loss. Companies prefer to persist with their current labor scheme without making changes that could disrupt their final production, including compliance with the quota for workers with disabilities.
• Hassle Factors: Sometimes we do not act on our intentions because small factors or inconveniences hinder us or make us uncomfortable. Incorporating workers with disabilities, for example, requires extra effort from the company in terms of setting up calls, interviews, and application processes. Additionally, such activity can entail increasing companies’ budget for worker salaries to include people with disabilities or terminating the contracts of current employees.
• Overconfidence: This is the tendency to overestimate or exaggerate one's capacity to properly perform a certain task, in this instance evading detection. Although companies are aware of the quota for workers with disabilities who should be part of their workforce, the low level of oversight in Peru can make them confident that the regulatory body will not notice if they are not complying with the law.
• Social Norms: The series of unwritten rules governing behavior within a society. If other companies do not comply with the quota for disabled workers, a particular company may choose not to comply as well.

Behavioral tools

• Reminders: These can take the form of an email, a text message, a letter, or an in-person visit to someone who must decide on some aspects of their intention-action. Reminders are intended to mitigate procrastination, forgetfulness, and/or cognitive overload. The letters sent serve as reminders by providing information related to compliance with the quota for disabled workers.
• Personalization: Personalizing information based on individual characteristics and traits of identity is shown to improve responsiveness and outcomes. The letter includes the name of the company to which it is addressed.
• Messenger: The identification of the sender, whether an individual or an institution, plays a crucial role in how the recipient interprets the message. The letter specifies that the regulatory body, a credible organization overseeing procedures related to fulfilling the quota for disabled individuals, is the sender.

Intervention design

The aim of the intervention is to estimate the effect that the letters have on companies' perception of the probability of being audited for compliance with the law—in other words, whether the company, after receiving the letter, considers it more likely to be audited, leading to increased compliance with legislation.

In this experiment, two types of letters were sent to identify which type is more effective. One type of letter follows a punitive approach, highlighting the fines that the company may incur for non-compliance, while the other type emphasizes the benefits of the company's social commitment.

• Punitive Approach: Emphasizes that failing to meet the quota for employing people with disabilities is a serious offense and highlights the cost of the associated punishment (fine). The central message is:

"The current regulations classify not registering workers on payroll and/or not enrolling them in the corresponding social security systems for health and pensions as a very serious offense. Nevertheless, being a private sector employer, the severity of non-compliance with the Employment Quota for people with disabilities would add further implications, all of which would lead to the imposition of fines in a significantly increased magnitude directly depending, among other factors, on the number of affected workers."

• Social Commitment Approach: Seeks to assess whether companies are willing to cooperate voluntarily. This letter emphasizes that hiring workers with disabilities contributes to reversing labor exclusion. The central message is:

"The employment quota aims to combat labor discrimination. The Working-Age Population with some form of disability seeking employment or discouraged due to not having found any surpasses 68 thousand people in Peru. By complying with the Employment Quota, your company contributes to reversing this situation of labor exclusion."

Except for the central content, both types of letters maintain a similar structure, providing information about government oversight efforts and inviting companies to review their situation. The link to the website containing information on how companies can fulfill their obligations is included. Additionally, the letters were personalized and sent to the legal representative of each company, including the SUNAFIL signature.

To evaluate the impact of sending the letters on compliance with the employment quota for people with disabilities, a randomized controlled trial (RCT) is employed. Out of 4,682 companies that did not meet the quota in 2016; 2,000 are randomly selected. From those, 500 received a letter with a punitive approach, and another 500 received a letter with a social commitment approach. The remaining 1,000 companies make up the control group. The letters were sent through a certified courier company between December 20, 2017, and January 10, 2018.

Challenges

The letters were not delivered to all recipients due to non-reception or changes and errors in the addresses of the companies. The letter reception rate is approximately 88%, indicating the level of take-up of the program.

The randomization was conducted based on companies registered in the electronic payroll in 2016. However, there is a percentage of these companies (1%) that lacks recorded information for the period used in evaluating the impact of the experiment (from January 2017 to October 2019). Over this period, some companies may have ceased operations or not reported contributions for any of their workers.

Information about workers in some companies is not available for all months during the evaluation period, and the cause of these gaps in data cannot be identified. It is possible that the company ceased operations or did not make social security declarations for any of its workers. The results presented in this report assume that, in months without recorded information, the number of workers in the company is zero. Throughout the experiment, 13.7% of companies experienced at least one month without data in the payroll for the period from January 2017 to October 2019.

Results

The results show that sending letters increases the number of workers with disabilities working in companies, generating a significant positive impact on the hiring of at least one hour of work by a person with a disability. Although it is not possible to bring about full compliance with the employment quota, the companies that receive the letters took actions related to this goal.

The message in the letter is important, however, as companies that received the letter with the punitive message subsequently register a higher number of workers with disabilities than those that received the letter with the social commitment message. In addition, this effect lasts over time, unlike the group that received the letter focused on social benefit. The effect of the punitive message is mainly concentrated in medium-sized companies, which are those between 80 and 160 workers.

Policy implications

It is necessary to improve the relationship between the supervisory authority and companies, implementing new approaches as complementary tools to traditional labor inspection.

Sending letters has great potential to inform companies about their employment obligations and the consequences of not breaching.

The sustainability of alternative channels such as letters and notifications is linked to greater enforcement action on the part of the authorities, to prevent the warning threat from becoming non-credible over time.