Job Characteristics and Labor Market Discrimination in Promotions: New Theory and Empirical Evidence

Abstract

Abstract[Excerpt] We present new theory and the first empirical test of promotion discrimination models based on job assignment signaling. In our theory, promotions serve as signals of worker ability, and job hierarchies differ in the degree to which tasks vary across hierarchical levels. When tasks differ substantially across levels, the opportunity cost (in terms of foregone output) of not promoting qualified workers from a disadvantaged group (e.g. racial minorities or females) is large, so employers are less likely to (inefficiently) retain such workers in lower-level jobs. Thus, given performance in the pre-promotion job, the extent to which disadvantaged workers have lower promotion probabilities than advantaged workers should decrease when tasks vary more across hierarchical levels. Also, the difference between the favored and disfavored groups in the wage increase attached to promotion should diminish when tasks vary more across hierarchical levels. We test these implications empirically for the case of racial discrimination in promotions, using personnel data from a large U.S. firm and also data from the National Compensation Survey. We find strong empirical support for the theoretical model's predictions concerning promotion probabilities, whereas empirical support is mixed for the model's predictions concerning the wage growth attached to promotions. JOB CHARACTERISTICS AND LABOR MARKET DISCRIMINATION IN PROMOTIONS: NEW THEORY AND EMPIRICAL EVIDENCE AbstractWe present new theory and the first empirical test of promotion discrimination models based on job assignment signaling. In our theory, promotions serve as signals of worker ability, and job hierarchies differ in the degree to which tasks vary across hierarchical levels. When tasks differ substantially across levels, the opportunity cost (in terms of foregone output) of not promoting qualified workers from a disadvantaged group (e.g. racial minorities or females) is large, so employers are less likely to (inefficiently) retain such workers in lower-level jobs. Thus, given performance in the pre-promotion job, the extent to which disadvantaged workers have lower promotion probabilities than advantaged workers should decrease when tasks vary more across hierarchical levels. Also, the difference between the favored and disfavored groups in the wage increase attached to promotion should diminish when tasks vary more across hierarchical levels. We test these implications empirically for the case of racial discrimination in promotions, using personnel data from a large U.S. firm and also data from the National Compensation Survey. We find strong empirical support for the theoretical model's predictions concerning promotion probabilities, whereas empirical support is mixed for the model's predictions concerning the wage growth attached to promotions.2

A medida do talento: evidências de validade de uma escala para aferir talento em organizações

“…Por fi m, o resultado de maiores níveis de talento entre aqueles que receberam convite de trabalho de outras organizações nos últimos 12 meses era esperado e está em acordo com a argumentação de DeVaro et al (2007) sobre competição no mercado de trabalho. Segundo De-Varo et al (2007) profi ssionais talentosos cuja qualidade do trabalho é reconhecida, por exemplo por meio de aumentos salarias e promoções, são colocados em evidência e passam a ser cobiçados por outras organizações.…”

Promotion signaling, discrimination, and positive discrimination policies

“…DeVaro, Ghosh, and Zoghi () extend the model by Milgrom and Oster (), and they derive some implications that they test with data obtained from the personnel records of a large US firm. Dato et al.…”

“…The promotion‐signaling model was developed by Waldman () and extended by Bernhardt (), Zábojník and Bernhardt (), Owan (), Ghosh and Waldman (), DeVaro and Waldman (), DeVaro, Ghosh, and Zoghi (), Zábojník (), Waldman (), Gürtler and Gürtler (), Cassidy, DeVaro, and Kauhanen (), DeVaro and Kauhanen (), Shankar (), and Waldman ().…”

Promotion Signaling, Discrimination, and Positive Discrimination Policies

“…It is possible that dominance of a group of workers persists, and these workers are more likely to be promoted than the workers of some other group. A consequence of this assumption is that firms have an incentive to "hide" their Invisibles in the low-level job, implying that these workers are discriminated against with 5 The promotion-signaling model was developed by Waldman (1984) and extended by Bernhardt (1995), Zábojník and Bernhardt (2001), Owan (2004), Ghosh and Waldman (2010), DeVaro and Waldman (2012), DeVaro, Ghosh, and Zoghi (2012), Zábojník (2012), Waldman (2013), Gürtler and Gürtler (2015), Cassidy, DeVaro, and Kauhanen (2016), DeVaro and Kauhanen (2016), Shankar (2016), and Waldman (2016). A worker is promoted if and only if firms have a sufficiently high expectation of the worker's ability.…”

“…Within group l, we define function F l : [a l , a l ] → [0, 1] with F l (x) := λ({ j|a jl ∈ [a l , x]})/n l , where λ denotes the Lebesgue measure, that is, F l (x) denotes the share of workers from group l with an ability not greater 7 DeVaro, Ghosh, and Zoghi (2012) extend the model by Milgrom and Oster (1987), and they derive some implications that they test with data obtained from the personnel records of a large US firm. Within group l, we define function F l : [a l , a l ] → [0, 1] with F l (x) := λ({ j|a jl ∈ [a l , x]})/n l , where λ denotes the Lebesgue measure, that is, F l (x) denotes the share of workers from group l with an ability not greater 7 DeVaro, Ghosh, and Zoghi (2012) extend the model by Milgrom and Oster (1987), and they derive some implications that they test with data obtained from the personnel records of a large US firm.…”