Using
data on 36,949 newly-hired commission-based salespeople at a major U.S.
retailer, we find that white, black and Hispanic managers within the
same store are more likely to hire workers of their own race. This may
be caused by managers' intrinsic taste for hiring same-race applicants
(taste-based discrimination), or by their greater ability to screen
same-race applicants (screening discrimination). We derive the testable
implications of these models for the mean and variance of productivity
and show that white and Hispanic hiring is consistent with the screening
hypothesis. We find little evidence of complementarities between
supervising (rather than hiring) managers or employee discrimination in
this setting.
We show that the increasingly popular use of subjective assessments of employee “potential”contributes to gender gaps in promotion and pay. Using data on management-track employees from a large retail chain, we find that women receive substantially lower potential ratings despite receiving higher job performance ratings. Differences in potential ratings account for 30-50%of the gender promotion gap. Women’s lower potential ratings do not appear to be based on accurate forecasts of future performance: women outperform male colleagues with the same potential ratings in terms of their future performance ratings, both on average and conditional on promotion. Yet, even in these cases, women’s subsequent potential ratings remain low, suggesting that firms persistently underestimate the potential of female employees.
A Numbers Game: Quantification of Work, Auto-Gamification, and Worker Productivity
with Aruna Ranganathan. 2020. American Sociological Review, 85(3): 573-609.
Does
monitoring workers improve or impair their productivity? Existing
studies offer conflicting predictions. Using personnel and operational
data from an Indian garment manufacturing plant, we examine how an RFID
monitoring intervention on three of the plant's twelve production lines
affected productivity. We find that the effect of monitoring varied by
the complexity of the work performed. Using variation in work complexity
both across and within production lines, we find that monitoring
significantly increased productivity for simple work but significantly
decreased productivity for complex work. We contribute to research on
monitoring and productivity by demonstrating how key job characteristics
that make work meaningful, such as complexity, can moderate the effect
of monitoring on productivity by affecting workers' intrinsic
motivation. Results also suggest that not only does the Hawthorne effect
exist, but its direction can be positive, negative, or neutral
depending on work complexity.
Can Reputation Discipline the Gig Economy?
Experimental Evidence from an Online Labor Market
with Aaron Sojourner and Akhmed Umyarov. 2020. Management Science, 66(5): 1783-2290. Download / Replicate
In three experiments, we examine the effects of employer reputation in an
online labor market (Amazon Mechanical Turk) in which employers may decline to
pay workers while keeping their work product. These three experiments test the
value of the employer reputation system for workers, employers, and the market.
Specifically, in audit study of employers by a blinded worker, we find that
working only for good employers yields 40% higher wages. Second, in an
experiment that varies reputation, we find that good-reputation employers
attract work of the same quality but at twice the rate as bad-reputation
employers. Lastly, we exploit the natural experiment of instances when the
reputation system servers are down, and find that the reputation system is
serving the market by attracting work to small, good employers who appear to
rely on the system to attract workers, and apparently away from the largest and
best-known among good employers. This is the first clean, field evidence that
employer reputation serves as a collateral against opportunism in the absence of
contract enforcement in online markets.
Promotions and the Peter Principle
with Danielle Li and Kelly Shue. 2019. Quarterly Journal of Economics, 134(4): 2085-134.
Download / Appendix / Summary / Replicate
The best worker isn't always the best candidate for manager. In these cases, do
firms promote the best potential manager or the best worker in their current
job? Using microdata on the performance of sales workers at 214 firms, we find
evidence consistent with the Peter Principle: firms prioritize current job
performance when making promotion decisions at the expense of other observable
characteristics that better predict managerial quality. We estimate that the
costs of managerial mismatch are substantial, suggesting that firms make
inefficient promotion decisions or the incentive benefits of emphasizing current
performance is also high.
Strength from Within: Individual and Store-Level Evidence that Transfers Outperform Hires
with Ben Rissing. 2019. Organization Science, 31(6): 1475-1496.
We
develop and test a theoretically-informed and generalizable empirical
framework for evaluating the performance gap between internally and
externally hired workers. First, human capital theory predicts internal
hires will be immediately more productive than external hires. Second,
contextual learning predicts internal hires will be more productive with
time. Finally, theories of commitment, which are rarely applied to this
literature, predict that internal advancement enhances retention among
high performers (“positive retention”). Applying a general empirical
framework for quantifying these mechanisms to a retailer with 109,063
commissioned salespeople and their 12,931 managers, we find the gap in
our setting is primarily driven by positive retention: high performers
and internal hires are less likely to quit, and crucially, high
performing internal hires are especially unlikely to quit. When high
performing internal hires do quit, they tend to cite nonwork related
reasons rather than advancement opportunities. Firm-specific skills and
contextual learning may be less relevant in our setting than theories
that link internal advancement to the retention of high performers. By
examining performance and retention in isolation, researchers and
organizations may be underestimating the importance of internal
advancement as a means of retaining of high performers.
Are Bonus Pools Driven by their Incentive
Effects? Evidence from Fluctuations in Gainsharing Incentives
with Sima Sajjadiani. 2017. Industrial & Labor Relations
Review, 71(3): 567-99. PDF / Journal / Replicate
Shared bonus pools, in which a worker’s bonus depends both on a worker’s share
of the pool (which serves as the incentive) and on the size of the pool (which
is largely outside of the worker’s control), are a common method for
distributing bonus pay. Using variation in the size of the bonus pool generated
by a manufacturing plant’s gainsharing plan, which varies incentives for
quality and worker engagement, we evaluate the conditions under which
incentives distributed from bonus pools have incentive effects. Overall,
results are cautionary: the evidence suggests gainsharing’s benefits operate
outside of the incentive channel, and incentives can backfire if they are too
small or too diluted by group performance metrics. Lastly, we illustrate how
random variation in the size of bonus pools offers researchers a powerful,
readily available, and underused tool for studying how workers respond to the
availability and strength of incentives.
Do Agents Game Their Agents’ Behavior?
Evidence from Sales Managers.
2015. Journal of Labor Economics, 33(4): 863-90. Download / Journal
This paper explores intermediary agency problems, specifically the use and
misuse of authority and incentives in organizational hierarchies. I offer a
principal-agent-supervisor model inspired by sales settings. Through it, I
propose organizations delegate authority over rank-and-file workers to
immediate managers, even though the performance of rank-and-file workers is
known to the firm, because managers' private information allows them to
distinguish ability from luck. The model yields the result that managers on the
cusp of a quota have a unique personal incentive to retain and provide downward
quota adjustments to poor performing subordinates, allowing me to identify of
the interests of the manager as separate from the firm. I parametrically
estimate the model using detailed person-transaction-level microdata from 244
firms that subscribe to a “cloud”-based service for automating transaction
processing and compensation. I estimate 13-15% of quota adjustments and
retentions among poor performers are explained by the managers' unique personal
interest in meeting a quota. I draw upon organizational research to suggest how
performance analytics software may promote organizational efficiency.
Re-Thinking the Two-Body Problem: The
Segregation of Women into Geographically-Flexible Occupations
2014. Demography 51(5): 1619-39. Download / Replicate
I present a model of couples' job search whereby men segregate into occupations
that are geographically clustered (such as nuclear engineers) and women sort
into occupations that are geographically dispersed (such as jobs in health,
business support, or education) in advance of marriage and in anticipation of
future co-location problems. Using the Decennial Census, I calculate a measure
of geographic clustering-the share of members in that occupation that would need
to relocate for that occupation to have the same employment-to-population ratio
in all US metropolitan areas. Results confirm men segregate into
geographically-clustered occupations, and that these occupations involve
more-frequent early career relocations for both sexes. I also find that the
minority of the men and women who depart from this equilibrium experience later
marriage, higher divorce, and lower earnings. Results are consistent the theory
that marriage and mobility expectations foment a self-fulfilling pattern of
occupational segregation with individual departures deterred by earnings and
marriage penalties.
A Theory of Dual Job Search and Sex-Based
Occupational Clustering
2015. Industrial Relations 54(3): 367-400. Download / Replicate / Summary
I present a theory of couples’ job search whereby women sort into lower-paying
geographically dispersed occupations due to expectations of future spouses’
geographically clustered occupations and (thereby) inability to relocate for
work. Results confirm men segregate into clustered occupations, and that these
occupations involve more frequent early career relocations for both sexes. I
also find that the minority of the men and women who depart from this
equilibrium experience delayed marriage, higher divorce, and lower late-career
earnings. Results corroborate the theory’s implication that marriage and
mobility expectations foment a self-fulfilling pattern of occupational
segregation with individual departures deterred by earnings and marriage
penalties.
Firm-Sponsored General Education and
Mobility Frictions: Evidence from Hospital Sponsorship of Nursing Schools and
Faculty
2013. Journal of Health Economics, 32(1): 149-59. Download / Replicate
Using a unique data set of hospitals’ direct financial support to nursing schools
and faculty in 2008 and 2010, this paper finds that firms may pay for
technologically-general skill training that is made de facto-specific
by search frictions. Because this support is clearly general, clearly paid by
the firm, and information asymmetries appear minimal, it overcomes the typical
dilemmas of empirical research in firm-sponsored general education. Interviews
and existing studies suggest hospitals extract rents on incumbent nurses, and
an oligopsony model is proposed whereby hospitals sponsor training when they
employ a sufficient share of local nurses. Consistent with the model, surveys
conducted in 2008 and 2010 find that hospitals employing a greater share of its
MSA’s registered nurses are indeed more likely to support local schools and
faculty financially, net of size and other institutional controls. Implications
for human capital theory, monopsony, and nursing manpower are discussed.
Labor Market Trends Among Registered
Nurses: 2008-2011
2012. Policy, Politics, and Nursing Practice, 14(2). Download / Replicate
This paper uses public, proprietary, and survey data to examine recent
demographic and market trends for registered nurses in the United States.
Surveys conducted in 2008 and 2010 show how hospital nursing officers are
adapting recruitment, retention, training, and supplementation strategies to
new market conditions. Since beginning of the recession, nursing unemployment
remained about one-fourth the national average, rising above 2% in 2009. In the
same period, the mean vacancy rate for surveyed hospital administrators dropped
from 7.2% to 4.2%. Expanding non-overtime employment from domestic entrants and
re-entrants exceeds the contraction in foreign labor and overtime labor,
resulting in a 1.4% growth in total RN hours in 2009, down from about 5% in
previous years. Surveyed hospital administrators report reductions in bonuses
for new recruits, overtime, turnover, budgeted vacancies, tuition support, and
overall perception of a shortage. Findings suggest how nurse recruitment,
retention, training, and utilization adapt to economic conditions.
The Long-Haul Effects of Interest
Arbitration: The Case of New York State’s Taylor Law
2010. with Thomas Kochan, David Lipsky, and Mary Newhart. Industrial & Labor Relations Review
64(4): 565-84. Download / Replicate
The authors use experiences with interest arbitration for police and
firefighters under New York State’s Taylor Law from 1974 to 2007 to examine the
central debates about the effects of this form of arbitration on collective
bargaining. They draw on old and new data to compare experience with interest
arbitration in the first three years after it was adopted with experiences from
1995 to 2007. They find that no strikes have occurred under arbitration, rates
of dependence on arbitration declined considerably, the effectiveness of
mediation prior to and during arbitration remained high, the tripartite
arbitration structure continued to foster discussion of options for resolution
among members of the arbitration panels, and wage increases awarded under
arbitration matched those negotiated voluntarily by the parties. Econometric
estimates of the effects of interest arbitration on wage changes in a national
sample suggest wage increases between 1990 and 2000 in states with arbitration
did not differ significantly from those in states with non-binding mediation
and factfinding or states without a collective bargaining statute. The length
of time required to complete the arbitration process increased substantially
and several critical employment relations issues facing the parties have not
been addressed within the arbitration system. The authors suggest these
findings should be considered by both critics and supporters of proposals to
include a role for interest arbitration in national labor policy.