Job Characteristics and Labor Market Discrimination in Promotions

We extend promotion signaling theory to generate new testable implications concerning racial differences in promotions. In our model, promotions signal worker ability. When tasks differ substantially across job levels, the opportunity cost of not promoting qualified non‐whites/non‐Asians is large, so employers are less likely to inefficiently withhold their promotions. Thus, given prepromotion performance, the extent to which non‐whites/non‐Asians have lower promotion probabilities decreases when tasks vary more across levels. Racial differences in wage increases at promotion diminish when tasks vary more across levels. Evidence from a single firm's personnel records supports the model's predictions concerning promotion probabilities.     

Climbing the Job Ladder: New Evidence of Gender Inequity

An explanation for the gender wage gap is that women are less able or less willing to “climb the job ladder.” However, the empirical evidence on gender differences in job mobility has been mixed. Focusing on a subsample of younger, university‐educated workers from an Australian longitudinal survey, we find strong evidence that the dynamics of promotions and employer changes worsen women’s labor market position.     

International Differences in Wage Inequality: A New Glance with European Matched Employer–Employee Data

Using international harmonized matched employer–employee micro data from the European Structure of Earnings Survey for nine European countries, this article examines the origin of international differences in wage inequality. Wage inequality is highly correlated with the magnitude of inter‐firm wage differentials. Workplace‐ and job‐related factors generally have a more significant impact on within‐country wage inequality than individual characteristics. European countries differ significantly not only in the extent of wage inequality but also in the relative influence of factors shaping wage inequality. Although cross‐country differences in labour force composition play a part in the explanation, differences in the distribution and in labour market prices attached to workplace and job characteristics are the primary factors contributing to international differences in wage inequality.     

Strategic promotion tournaments and worker performance

In this analysis I study promotion schemes as human resource management strategies by which the firm can realize strategic goals by motivating workers to higher levels of effort and performance. Using information on promotions, wages, and performance for professional workers in a cross‐section of establishments in four metropolitan areas of the United States, I investigate empirically the proposition that firms strategically organize promotion tournaments to motivate workers to higher levels of performance. I present evidence suggesting that relative performance of workers determines promotions, supporting the notion of internal promotion competitions in which internal hiring policies and fixed job slots combine to create competitions among workers of a given rank in a firm. I then estimate a structural model of promotion tournaments that simultaneously accounts for worker and firm behavior and how the interaction of these behaviors gives rise to promotions. The results are consistent with the prediction of tournament theory that workers are motivated by larger spreads. Copyright © 2006 John Wiley & Sons, Ltd.     

Moving Up or Falling Behind? Gender,Promotions, and Wages in Canada

We estimate that Canadian women working full time are 1.8 percentage points less likely to be promoted, receive fewer promotions, and experience 2.8 percent less wage growth following promotions than similar men. Significant “family gaps” exist among women. Women without children are less likely to have been promoted than similar men but experience similar wage growth following promotions, while women with children are as likely to have been promoted but experience less wage growth following promotions. Weekly hours and overtime hours explain significant fractions of these gender gaps. Though not precisely estimated, gender gaps in promotions also exist among part‐time workers.     

Are Minimum Wage Effects Greater in Low‐Wage Areas?

Empirical work on the minimum wage typically estimates effects averaged across high‐ and low‐wage areas. Low‐wage labor markets could potentially be less able to absorb minimum wage increases, in turn leading to more negative employment effects. In this article, we examine minimum wage effects in low‐wage counties, where relative minimum wage ratios reach as high as 0.82, well beyond the state‐based ratios in extant studies. Using data from the American Community Survey, the Quarterly Workforce Indicators, and the Quarterly Census on Employment and Wages, we implement event study and difference‐in‐differences methods, estimating average causal effects for all events in our sample and separately for areas with lower and higher impacts. We find positive wage effects, especially in high‐impact counties, but do not detect adverse effects on employment, weekly hours, or annual weeks worked. We do not find negative employment effects among women, Blacks, and/or Hispanics. In high‐impact counties, we find substantial declines in household and child poverty. These results inform policy debates about providing exemptions to a $15 federal minimum wage in low‐wage areas.     

Political Entrepreneurs and Co‐Managers: Labour Transnationalism at Four Multinational Auto Companies

This article examines labour transnationalism within four multinational automakers. In our sample, we find different forms of labour transnationalism, including transnational collective bargaining, mobilization, information exchange and social codes of conduct. We explain the differences through the interaction between management and labour in the context of the company structure; of particular importance are transnational coercive comparisons by management and the orientations of worker representatives as political entrepreneurs or co‐managers. We conclude that, although intensified worker‐side cross‐border co‐operation has not prevented wage‐based competition in general (due to the lack of between‐firm co‐ordination), it has reshaped employment relations within these multinational corporations.     

Job Satisfaction and Promotions

This paper estimates the impact of promotions and promotion expectations on job satisfaction using the 1996–2006 waves of the NLSY79 dataset. Having received a promotion in the past 2 years leads to increased job satisfaction, even while controlling for the worker’s current wage, wage rank within her peer group, and wage growth. Workers who believe a promotion is possible in the next 2 years also report higher job satisfaction. Additionally, past promotions have a lingering, but fading impact on job satisfaction.     

Firm‐Level Collective Bargaining and Wages in Greece: A Quantile Decomposition Analysis

This article analyzes the effect of firm‐level contracting on the wage structure in the Greek private sector. Using a matched employer–employee dataset for 2006, unconditional quantile regressions and relevant decomposition methods, we identify a wage premium associated with firm‐level contracting, which follows a hump‐shaped profile across the wage distribution. Further, the wage differential between workers under firm‐level and broader‐level collective agreements can be primarily attributed to the differences in the regime‐specific wage setting structure, for those below the median of the unconditional wage distribution, and to differences in worker and firm‐specific characteristics for those in the upper tail.     

We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany

This article establishes a link between the degree of productivity dispersion within an industry and collective bargaining coverage of the firms in the industry. In a stylized unionized oligopoly model, we show that differences in productivity levels can affect the design of collective wage contracts a sector‐union offers to heterogeneous firms. Using German linked employer–employee data, we test a range of our theoretical hypotheses and find empirical support for them. The dispersion of sector‐level labour productivity decreases the likelihood of firms being covered by a collective bargaining agreement on the industry level, but increases the likelihood of firms being covered by firm‐level agreements. The results hold for different subsamples and (panel) estimation techniques.     

Gender Differences in the Returns to and the Acquisition of On-the-Job Training

This article finds that gender differences in on-the-job training significantly affect the male/female wage gap. First, we find that previously trained workers exhibit larger cumulative wage gains during their current training. Thus, a substantial portion of the gender wage gap results from the fact that women have little prior training relative to men. Second, a significant amount of the observed male/female wage differential is explained by less female acquisition of current training. Gender differences in workplace promotion and training practices help explain why women accumulate less training than men. Both of these sources of gender differences have lessened from 1976 to 1985, which has led to a narrowing of the male/female wage gap.     

What Types of Diversity Benefit Workers? Empirical Evidence on the Effects of Co‐worker Dissimilarity on the Performance of Employees

This study explores the consequences of grouping workers into diverse divisions on the performance of employees using a dataset containing the detailed personnel records of a large U.S. firm from 1989 to 1994. In particular, I examine the effects of demographic dissimilarity among co‐workers, namely differences in age, gender, and race among employees who work together within divisions, and non‐demographic dissimilarity, namely differences in education, work function, firm tenure, division tenure, performance, and wages among employees within divisions. I find evidence that age dissimilarity, dissimilarity in firm tenure, and performance dissimilarity are associated with lower worker performance, while wage differences are associated with higher worker performance. My analysis also reveals that the effects of certain types of dissimilarities get smaller in magnitude the longer a worker is a part of a division. Finally, the paper provides evidence that the relationships between performance and the various measures of dissimilarity vary by occupational area and division size.     

Who’s Displaced First? The Role of Race in Layoff Decisions

We test empirically the proposition that race significantly affects an employee's layoff chances. Using data from a financial firm (N = 8918), we find that whites are less likely to be laid off than nonwhites and that, among nonwhites, Asians are less likely to be laid off than blacks or Hispanics. These findings are statistically significant after controlling for structural factors (business unit, occupation, and job level) and individual characteristics (tenure and performance rating). A similar pattern of racial differences exists in other employment practices more actively monitored by the firm, including promotions, pay raises, and performance ratings. Yet these differences are smaller than those in layoffs and are significant for blacks only, not for Hispanics. Our findings suggest that monitoring personnel decisions can reduce racial inequality. Furthermore, our findings highlight that racial differences in employment outcomes vary among minority groups.     

Upstreamness,Wages and Gender: Equal Benefits for All?

This article provides first evidence on the impact of a direct measure of firm‐level upstreamness (i.e. the steps before the production of a firm meets final demand) on workers’ wages. It also investigates whether results vary along the earnings distribution and by gender. Findings, based on unique matched employer–employee data relative to the Belgian manufacturing industry for the period 2002–2010, show that workers earn significantly higher wages when employed in more upstream firms. Yet, the gains from upstreamness are found to be very unequally shared among workers. Unconditional quantile estimates suggest that male top earners are the main beneficiaries, whereas women, irrespective of their earnings, appear to be unfairly rewarded. Quantile decompositions further show that these differences in wage premia account for a substantial part of the gender wage gap, especially at the top of the earnings distribution.     

Wage Dispersion and Firm Productivity in Different Working Environments

This article investigates the impact of wage dispersion on firm productivity in different working environments. More precisely, it examines the interaction with: (i) the skills of the workforce, using a more appropriate indicator than the standard distinction between white‐ and blue‐collar workers, and (ii) the uncertainty of the firm economic environment, which has, to our knowledge, never been explored on an empirical basis. Using detailed cross‐sectional linked employer–employee data for Belgium, we find a hump‐shaped relationship between (conditional) wage dispersion and firm productivity. This result suggests that up to (beyond) a certain level of wage dispersion, the incentive effects of ‘tournaments’ dominate (are dominated by) ‘fairness’ and/or ‘sabotage’ considerations. Findings also show that the intensity of the relationship is stronger for highly skilled workers and in more stable environments. This might be explained by the fact that monitoring costs and production–effort elasticity are greater for highly skilled workers, and that in the presence of high uncertainty, workers have less control over their effort–output relation, and associate higher uncertainty with more unfair environments.     

Let them go? How losing employees to competitors can enhance firm status

Research summary : Because employees can provide a firm with human capital advantages over competitors, firms invest considerably in employee recruiting and retention. Departing from the retention imperative of strategic human capital management, we propose that certain employee departures can enhance a firm's competitiveness in the labor market. Specifically, increased rates of career‐advancing departures by a firm's employees can signal to potential future employees that the firm offers a prestigious employment experience that enhances external mobility opportunities. Characterizing advancement based on subsequent employers and positions, we analyze data on U.S. law firm hiring and industry surveys of perceived firm status between 2004 and 2013. We find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Managerial summary : Firms often emphasize employee retention. Employee departures, especially as a result of being hired away by competitors, are often viewed as threats to a firm's competitive advantage. We propose, however, that employee retention need not be an unconditional strategic imperative. We argue that certain employee departures can enhance a firm's competitiveness in the market for human capital by signaling to potential employees that the firm offers a prestigious employment experience, which can help them obtain attractive positions with other employers. Analyzing data on U.S. law firm hiring and industry surveys of firm associates between 2004 and 2013, we find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Copyright © 2016 John Wiley & Sons, Ltd.     

Is performance driven by industry‐ or firm‐specific factors? A response to Hawawini,Subramanian, and Verdin

Hawawini, Subramanian, and Verdin (2003) examined the relative impact of industry‐ vs. firm‐level factors shaping firm performance. They demonstrated that variance in firm performance attributable to industry‐level factors increases, while variance attributable t to firm‐level factors decreases when ‘exceptionally’ higher‐ and lower‐performing ‘outlier’ firms in each industry are excluded. They concluded that previous research underestimated the relative impact of industry‐level factors for ‘average’ firms that make up the bulk of an industry. We take issue with their methods used to identify and exclude outliers as well as their conclusions drawn from such analyses. Rather than excluding true ‘outlier’ firms, we argue that they incorporated an artificial restriction of within‐industry sample variance that almost deterministically led to lower firm and higher industry variance component estimates. We demonstrate this point with a comparable sample of data to which we apply progressively greater restrictions on within‐industry sample variance leading to similar results. Finally, we show that exclusion of firms from a data sample based on commonly understood standards of outlier identification leads to little change in industry and firm variance component estimates compared to full‐sample estimates. Copyright © 2005 John Wiley & Sons, Ltd.     

The Heterogeneous Effects of Workforce Diversity on Productivity,Wages, and Profits

We estimate the impact of workforce diversity on productivity, wages, and productivity–wage gaps (i.e., profits) using detailed Belgian linked employer–employee panel data. Findings show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. While gender diversity is found to generate significant gains in high‐tech/knowledge‐intensive sectors, the opposite result is obtained in more traditional industries. Estimates neither vary substantially with firm size nor point to sizeable productivity–wage gaps except for age diversity.     

The Institutional Context of an ‘Empirical Law’: The Wage Curve under Different Regimes of Collective Bargaining

The wage curve postulates that the wage level is a decreasing function of the regional unemployment rate. In testing this hypothesis, most studies have not taken into account that differences in the institutional framework may have an impact on the existence (or the slope) of a wage curve. Using a large‐scale linked employer–employee dataset for Western Germany, this article provides a first direct test of the relevance of different bargaining regimes (and of works councils) for the existence of a wage curve. In pooled regressions for the period 1998 to 2006, as well as in worker‐level or plant‐level fixed‐effects estimations, we obtain evidence for a wage curve for plants with a collective bargaining agreement at firm level. The point estimates for this group of plants are close to the ?0.1 elasticity of wages with respect to unemployment postulated by Blanchflower and Oswald. In this regime, we also find that works councils dampen the adjustment of wages to the regional unemployment situation. In the other regimes of plants that either do not make use of collective contracts or apply sectoral agreements, we do not find a wage curve.