Workshop Bocconi Uni Credit Universities Gender Economics More
Workshop Bocconi – Uni. Credit & Universities Gender Economics “More versus Closer Friends: How Social Networks Shape Performance” Ilse Lindenlaub (European University Institute, Florence) and Anja Prummer (Cambridge-INET Institute, University of Cambridge) UWIN Best Paper Award – 3 rd edition Milan, November 14, 2013
RESEARCH QUESTION § Network closure facilitates cooperation and leads to higher level of trust and helps individuals overcome public good problems (Coleman) Peer Pressure § Networks with lower closure provide greater access to information and other resources (Burt); "strength of weak ties" (Granovetter) Access to Information Trade off between network closure and reach Trade off between Peer Pressure and Access to Information Under what circumstances is peer pressure more beneficial for performance on the job? And when is access to information more important? 2 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
APPLICATION: GENDER § We focus on differences in network structure and find that § § § 3 Men have a higher number of friends: better access to information Women’s friends are more likely to be friends among each other: higher peer pressure Model that connects network disparities to difference on job performance can help explain why men and women sort into different occupations as well as gender wage gap Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
MODEL Ø Workers cooperate repeatedly in pairs to complete projects. Ø Each team member chooses a level of effort, which is unobservable to the project partner. Effort is inefficiently low Ø Effort depends on access to information as well as peer pressure. Ø Both network characteristics can help increase effort, reducing the team moral hazard. But it is not a priori clear which network characteristic is more beneficial. How is effort determined? 4 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
MODEL: DETERMINANTS OF EFFORT Ø Effort depends on project value, which can be high or low Ø Access to information means a more accurate understanding of whether the project value is high or low Ø Additional information can increase or decrease effort. Ø If additional information points to a low project value, it is better to reduce effort. Ø If information makes high value more plausible, effort increases. Ø Peer pressure increases effort independently of whether project value is high or low (peer pressure based on structural balance theory) Women outperform men when the uncertainty about the project value is negligible. Men have a more precise assessment of the project value and fine-tune their effort. 5 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
SORTING IN OCCUPATIONS Based on this we would expect men and women to sort into different occupations: Ø Men should be prevalent in information intense occupations, where rewards are uncertain. Ø Women do better in jobs that are secure and offer low rewards. In reality (Fortin and Hubermann (2002)): Ø Men are prevalent in Academia, Investment Banking, Journalism Ø Women choose public sector jobs, employment in Education and Health and tend to work for Non-Profit Organisations 6 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
PERFORMANCE AT DIFFERENT CAREER STAGES We would predict the value of the network to vary depending on the career stage: Ø Information is provided through organisational hierarchy Ø Information flow is bottom-up Ø Once women are at a higher career stage their network is more beneficial In reality (Lalanne and Seabright (2011)): Ø Having women in the network is beneficial both for female and male executives Ø But it is not beneficial to employees at lower stages of the hierarchy 7 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
PERFORMANCE IN RECESSIONS We would predict women to perform better in recessions: Ø Women choose less risky jobs and should therefore face lower unemployment than men Ø Women perform better and should be hired instead of men In reality (Albanesi and Sahin (2013)): Ø Women face lower unemployment in a recession Ø Counterfactual: even if women did not choose different types of jobs than men, they would still face lower unemployment 8 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
GENDER WAGE GAP Gender wage gap follows from differences in performance: if effort is higher, wages are higher Ø Initial differences in wages have an impact on future wages Ø Women more likely to perform worse than men at beginning of the career, which has effects on wages today as well as tomorrow In reality (Babcock and Laschever (2003), Gerhart and Rynes (1991), Martell et al. (1996), Blinder (1973)): Ø Initial gender wage gap matters for future wage path. Ø Considerable part of the gender wage gap stems from different age-wage profiles • Women exhibit an almost flat age-wage profile, their wages do not rise over the life cycle, whereas male wages do. 9 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
CONCLUSION Ø We build a model that can help understand the relative advantages of network closure and network reach. Ø Network closure implies peer pressure, network reach improves access to information. Ø Our model can contribute to the understanding of the gender wage gap and other labor market differences between men and women. Ø Future work Ø Where do network differences between men and women come from? Ø How important are network differences compared to other factors that can help understand the gender wage gap? Ø What is the optimal team structure given the network structure of individuals? 10 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
CONTACTS Ilse Lindenlaub European University Institute Web page: https: //sites. google. com/site/ilselindenlaub/ E-mail address: ilse. lindenlaub@eui. eu Anja Prummer Cambridge-INET Institute, University of Cambridge Web Page: https: //sites. google. com/site/anjaprummer/ E-mail address: ap 809@cam. ac. uk 11 Workshop Bocconi – Uni. Credit & Universities Milan, November 14, 2013
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