Work in Progress

Discrimination in Hiring, with Simon Board and Moritz Meyer-ter-vehn

Revision requested at Review of Economic Studies.

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.



Early stage projects

  • A study with Danielle Li and Kelly Shue that follows up on the Peter Principle. We evaluate whether the organizations' performance evaluation process can successfully distinguish performance in one's current job from advancement potential.

  • A study with Sofia Bapna and Russell Funk. We are helping an organization conduct a randomized control trial of rejection letters to see if we can enhance jobseekers' persistence when applying to jobs and similar levels of jobs. 

  • A study with Tiesta Thakur. We are seeing how managers weigh their subordinates' luck when conducting performance evaluations. 

  • A study with Colleen Manchester and Myles Shaver. We are examining how having a working spouse encourages professional managers to consider startup opportunities. 

  • A study with Louis-Pierre Lepage. We're examining how hiring managers update their beliefs about the productivity of workers of different demographic groups.

Publications

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.