Beyond the Paycheck: Incentives Shaping Worker Well-Being in Ethiopia and Kenya’s Apparel Sector

<title>Abstract</title> <p>This study examines how financial and non-financial incentives affect worker well-being in Ethiopia and Kenya’s industrial sectors. Using data from 553 Ethiopian and 400 Kenyan workers surveyed in 2023, a hierarchical nested model assessed the impact of various incentive types. Salary, housing, and training significantly improved well-being, especially in Ethiopia. Ethiopian workers showed greater sensitivity to salary changes, consistent with diminishing marginal returns. In contrast, Kenyan managers, constrained by minimum wage laws and stronger labor institutions, relied more on non-financial incentives to enhance worker satisfaction. JEL code: J08, I32, M2</p>