Opportunity to Perform
The influence of pay transparency on (gender) inequity, inequality and the performance basis of pay
Tomasz Obloj & Todd Zenger
Nature Human Behaviour, forthcoming
Abstract:
Recent decades have witnessed a growing focus on two distinct income patterns: persistent pay inequity, particularly a gender pay gap, and growing pay inequality. Pay transparency is widely advanced as a remedy for both. Yet we know little about the systemic influence of this policy on the evolution of pay practices within organizations. To address this void, we assemble a dataset combining detailed performance, demographic and salary data for approximately 100,000 US academics between 1997 and 2017. We then exploit staggered shocks to wage transparency to explore how this change reshapes pay practices. We find evidence that pay transparency causes significant increases in both the equity and equality of pay, and significant and sizeable reductions in the link between pay and individually measured performance.
College Major Restrictions and Student Stratification
Zachary Bleemer & Aashish Mehta
University of California Working Paper, December 2021
Abstract:
Underrepresented minority (URM) college students have been steadily earning degrees in relatively less-lucrative fields of study since the mid-1990s. A decomposition reveals that this widening gap is principally explained by rising stratification at public research universities, many of which increasingly enforce GPA restriction policies that prohibit students with poor introductory grades from declaring popular majors. We investigate these GPA restrictions by constructing a novel 50-year dataset covering four public research universities' student transcripts and employing a staggered difference-in-difference design around the implementation of 29 restrictions. Restricted majors' average URM enrollment share falls by 20 percent, which matches observational patterns and can be explained by URM students' poorer average pre-college academic preparation. Using first-term course enrollments to identify students who intend to earn restricted majors, we find that major restrictions disproportionately lead URM students from their intended major toward less-lucrative fields, driving within-institution ethnic stratification and likely exacerbating labor market disparities.
Effects of Peer Groups on the Gender-Wage Gap and Life After the MBA: Evidence from the Random Assignment of MBA Peers
Mallika Thomas
Brookings Working Paper, November 2021
Abstract:
Using the historical random assignment of MBA students to peer groups at an elite business school in the United States, I explore the effect of the gender composition of a student's peers on the gender-wage gap at graduation, the field of study in business school, and on long-term outcomes up to 15 years after graduation. I find that a 10-percentage point increase in the share of male students in a student's peer group leads to a 2.1 percent increase in the salaries of female students at graduation, closing the gender gap in salaries at graduation by approximately two-thirds. In addition, women who are randomly-assigned to a greater share of male peers are more likely to enter male-dominated industries and occupations in their first job after graduation. The effects of peers on the wages of female MBAs accumulate over time. Women with a greater share of male peers receive job offers at graduation in occupations, industries, and firms that are associated with steeper earnings profiles and greater wage growth. Much of the difference in (offers for) long-term earnings profiles is explained by the effect of peers on human capital choices: women with more male peers are more likely to take quantitative courses in business school and to concentrate in finance, one of the highest paid areas of concentration. Almost all of the difference in starting salary, however, comes from a change in female students' willingness-to-accept the highest salary offered within their offer set. This paper provides evidence that in addition to changes in human capital investments, peers also contribute to the formation of preferences: women with more male peers are less willing to pay for the non-wage amenities of a job. Interestingly, the gender composition of peer groups has large and persistent effects on women, long after graduation, with effects nearly 25 times the effect observed at the time of graduation. These results reveal some underlying mechanisms through which the gender-wage gap can accumulate to the documented magnitudes over the course of the lifecycle, but also how the school peer environment can influence the start of the career and mitigate some of these effects in growing proportion over time as well.
Racial Disparities in the Paycheck Protection Program
Sergey Chernenko & David Scharfstein
NBER Working Paper, February 2022
Abstract:
Using a large sample of Florida restaurants, we document significant racial disparities in borrowing through the Paycheck Protection Program (PPP) and investigate the causes of these disparities. Black-owned restaurants are 25% less likely to receive PPP loans. Restaurant location explains 5 percentage points of this differential. Restaurant characteristics explain an additional 10 percentage points of the gap in PPP borrowing. On average, prior borrowing relationships do not explain disparities. The remaining 10% disparity is driven by a 17% disparity in PPP borrowing from banks, which is partially offset by greater borrowing from nonbanks, largely fintechs. Disparities in PPP borrowing cannot be attributed to lower awareness of PPP loans or lower demand for PPP loans by minority-owned restaurants. Black-owned restaurants are significantly less likely to receive bank PPP loans in counties with more racial bias. In these counties, Black-owned restaurants are more likely to substitute to nonbank PPP loans. This substitution, however, is not strong enough to eliminate racial disparities in PPP borrowing. Finally, we show that our findings apply more broadly across industries in a sample of firms that were likely eligible for PPP.
The 2021 Paycheck Protection Program Reboot: Loan Disbursement to Employer and Nonemployer Businesses in Minority Communities
Robert Fairlie & Frank Fossen
NBER Working Paper, February 2022
Abstract:
Was the $278 billion reboot of the $800 billion Paycheck Protection Program (PPP) in early 2021 disbursed equitably to minority communities? This paper provides the first analysis of how PPP funds were disbursed to minority communities in the third and final round of the program, which was specifically targeted to underserved and disadvantaged communities. Using administrative microdata on the universe of PPP loans, we find a strong positive relationship between PPP flows, as measured by the number of loans per employer business or loan amounts per employee, and the minority share of the population or businesses in the third round. In contrast, the relationship was negative in the first round of 2020 and less positive in the second round of 2020. We find a stronger positive relationship between minority share and loan numbers or amounts to employer businesses for first draw loans than second draw loans in 2021 (capturing some persistence in inequities). The patterns are similar for loan numbers and amounts to nonemployer businesses but with a strong positive relationship with minority share for both first draw and second draw loans. The rebooted PPP that ran from January to May 2021 appears to have been disbursed to minority communities as intended.
Gender, Race, and Network Advantage in Organizations
Emilio Castilla
Organization Science, forthcoming
Abstract:
Universities and colleges often engage in initiatives aimed at enrolling students from diverse demographic groups. Although substantial research has explored the impact of such diversity initiatives, less understood is the extent to which certain application strategies may continue to favor historically privileged groups, especially white men, as they seek admission to selective programs. With this study, I begin to address this gap by investigating the gender and racial implications of application endorsements - a common, often informal, network practice of signaling support for certain applicants that is shown to significantly boost an applicant's chances of admission. Using unique data on the applicants and matriculants to a full-time MBA program at one elite U.S. business school, I first assess whether the endorsement advantage differs across demographic groups. Building on the social networks, selection, and inequality literatures, I then identify and test three key theoretical mechanisms by which the endorsement process may potentially benefit white men more than women and racial minorities. Although I do not find evidence in the studied program that the application endorsement is valued differently by key admissions officers or that it provides a different quality signal depending on the applicant's gender or race, I do find that white men are significantly more likely than women and minorities to receive application endorsements. I conclude by discussing the implications of this study for understanding how gender and racial differences in accessing advantageous (often informal) network processes may undermine organizational efforts to achieve demographic equality and diversity.
Intersecting the Academic Gender Gap: The Education of Lesbian, Gay, and Bisexual America
Joel Mittleman
American Sociological Review, forthcoming
Abstract:
Although gender is central to contemporary accounts of educational stratification, sexuality has been largely invisible as a population-level axis of academic inequality. Taking advantage of major recent data expansions, the current study establishes sexuality as a core dimension of educational stratification in the United States. First, I analyze lesbian, gay, and bisexual (LGB) adults' college completion rates: overall, by race/ethnicity, and by birth cohort. Then, using new data from the High School Longitudinal Survey of 2009, I analyze LGB students' performance on a full range of achievement and attainment measures. Across analyses, I reveal two demographic facts. First, women's rising academic advantages are largely confined to straight women: although lesbian women historically outpaced straight women, in contemporary cohorts, lesbian and bisexual women face significant academic disadvantages. Second, boys' well-documented underperformance obscures one group with remarkably high levels of school success: gay boys. Given these facts, I propose that marginalization from hegemonic gender norms has important - but asymmetric - impacts on men's and women's academic success. To illustrate this point, I apply what I call a "gender predictive" approach, using supervised machine learning methods to uncover patterns of inequality otherwise obscured by the binary sex/gender measures typically available in population research.
Hiring women into senior leadership positions is associated with a reduction in gender stereotypes in organizational language
Asher Lawson et al.
Proceedings of the National Academy of Sciences, 1 March 2022
Abstract:
Women continue to be underrepresented in leadership positions. This underrepresentation is at least partly driven by gender stereotypes that associate men, but not women, with achievement-oriented, agentic traits (e.g., assertive and decisive). These stereotypes are expressed and perpetuated in language, with women being described in less agentic terms than men. The present research suggests that appointing women to the top tiers of management can mitigate these deep-rooted stereotypes that are expressed in language. We use natural language processing techniques to analyze over 43,000 documents containing 1.23 billion words, finding that hiring female chief executive officers and board members is associated with changes in organizations' use of language, such that the semantic meaning of being a woman becomes more similar to the semantic meaning of agency. In other words, hiring women into leadership positions helps to associate women with characteristics that are critical for leadership success. Importantly, our findings suggest that changing organizational language through increasing female representation might provide a path for women to break out of the double bind: when female leaders are appointed into positions of power, women are more strongly associated with the positive aspects of agency (e.g., independent and confident) in language but not at the cost of a reduced association with communality (e.g., kind and caring). Taken together, our findings suggest that female representation is not merely an end, but also a means to systemically change insidious gender stereotypes and overcome the trade-off between women being perceived as either competent or likeable.
Talent Hoarding in Organization
Ingrid Haegele
University of California Working Paper, February 2022
Abstract:
Most organizations rely on managers to identify talented workers for promotions. However, managers who are evaluated on team performance have an incentive to hoard workers. This study provides the first empirical evidence of talent hoarding using novel personnel records from a large manufacturing firm. Temporary reductions of talent hoarding increase workers' applications for promotions by 123%. Marginal applicants, who would not have applied in the presence of talent hoarding, are three times as likely as average applicants to be promoted. Talent hoarding contributes to misallocation of workers and perpetuates gender inequality in representation and pay at the firm.
What If We Leave It Up to Chance? Admissions Lotteries and Equitable Access at Selective Colleges
Dominique Baker & Michael Bastedo
Educational Researcher, March 2022, Pages 134-145
Abstract:
Many prominent social scientists have advocated for random-draw lotteries as a solution to the "problem" of elite college admissions. They argue that lotteries will be fair, equitable, eliminate corruption, reduce student anxiety, restore democratic ideals, and end debates over race-conscious admissions. In response, we simulate potential lottery effects on student enrollment by race, gender, and income, using robust simulation methods and multiple minimum thresholds for grades and standardized tests. In the overwhelming majority of lottery simulations, the proportions of low-income students and students of color drop precipitously. With a GPA minimum, we find the proportion of men could drop as low as one third. Admissions lotteries with minimum bars for GPA and/or standardized tests do not appear to produce more equitable outcomes.
Persistence of Discrimination: Theory and Experimental Evidence
Nishtha Sharma
University of California Working Paper, November 2021
Abstract:
Why does discrimination persist when there is evidence that discriminatory bias can be overcome? I answer this question with a novel application of contest theory and provide experimental evidence. I show that a favored candidate's threat of losing privilege is more salient than an unfavored candidate's opportunity of overcoming bias in a repeated competition. My findings reveal that reducible and reversible biases cause the favored candidate to increase their effort significantly more than the unfavored candidate unless the unfavored candidate cares sufficiently more about the future. Discrimination persists even when bias can be overcome due to the favored candidate's resistance to change.
Fragile or robust? Differential effects of gender threats in the workplace among men and women
Keith Leavitt et al.
Organizational Behavior and Human Decision Processes, January 2022
Abstract:
Drawing from precarious manhood theory, which proposes that manhood is an unstable social status and requires repair when threatened, we argue that gender threats at work motivate deviance and inhibit citizenship behavior for men, but not women. Beyond extending the tenets of precarious manhood theory into the work domain, we also integrate it with self-determination theory and explain why such effects are mediated by thwarted autonomy needs. We initially test these propositions in a survey study with working adults and an experiment, demonstrating that men respond with greater deviance when their gender status is threatened, relative to women. We then test our entire theoretical model in an experimental experience sampling (i.e., twice-daily diary) study within an organization. Here, our findings indicate that gender threats at the beginning of the workday (but not other threats to self-integrity) uniquely lead to increased daily workplace deviance and reduced daily organizational citizenship behavior for men (but not women), via autonomy needs thwarting (but not other self-determination needs). Collectively, our results shed light on the nature of gender threats, and their consequences for employee behavior.