Gender and Misallocation in the Labor Market

Managers are important for firm productivity (Bloom and Van Reenen, 2007, Lazear, Shaw and Stanton, 2015). Consequently, firms must decide how to assign the right workers to higher-level jobs (Rosen, 1982, Holmstrom and Tirole, 1989). However, little is known about how firms’ organizational design affects different groups of workers and whether it can explain why women continue to be underrepresented in higher-level positions. In this dissertation, I collect a unique dataset in collaboration with a large multinational firm in order to provide new insights on the key impediments that women face in their career progression.In the first chapter, I focus on the role of managers for workers’ career progression, which is motivated by the fact that 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. I find that talent hoarding reduces workers’ applications for promotions by more than half, with particularly large effects on women. Marginal female applications who would have not applied under talent hoarding are twice as likely than their male counterparts to land a promotion and three times as likely to outperform their team at a higher level. Talent hoarding thus contributes to misallocation of talent and perpetuates gender inequality in representation and pay. The second chapter builds on these findings and attempts to identify when and why gender differences in representation first emerge in the leadership hierarchy. The rich personnel records allow me to construct a new and granular measure of job hierarchy that captures career progression throughout the job ladder. I find that the transition to first-level leadership positions represents a key bottleneck in women’s career progression. This early leadership gap is not fully explained by employee characteristics and is driven by internal promotions, not differential entry to or exit from the firm. Women who make it to the first-level leader- ship level are not less likely to get promoted than men, which contrasts the common notion of a glass ceiling. The third chapter demonstrates why women are less likely to advance to first-level leadership positions than men. Identifying the drivers of female underrepresentation is difficult, because the promotion gap can arise due to both labor supply and labor demand factors. By combining rich personnel records and the universe of application and hiring decisions at a large multinational firm, I am able to analyze employees’ labor supply decisions separately from the firm’s labor demand decisions. I find that women at lower hierarchy levels are less likely to apply for promotions to first-level leadership positions than observationally similar men, but do not experience lower hiring likelihoods than men. Using detailed information on every internal job opening in employees’ choice sets, I show that preferences for leading a team are a key determinant of the gender gap in applications for promotions. These gender differences in preferences for team leadership are not fully explained by other factors, including correlated job features such as flexibility and skill requirements or the gender composition of the coworkers associated with a job opening. Together, these findings imply that the organizational design within firms may have large impacts on gender differences in career progression, deterring high-quality women from climbing the job ladder and contributing to misallocation of talent. While all three chapters use the same setting and data, each chapter is intended to be a stand-alone set of research questions, so the respective description is included within each chapter.

Advisor: Kline, Patrick
Card, David