Working Paper: NBER ID: w26530
Authors: Zo B. Cullen; Ricardo Perez-Truglia
Abstract: Offices are social places. Employees and managers take breaks together and talk about family and hobbies. In this study, we show that employees’ social interactions with their managers can be advantageous for their careers, and that this phenomenon contributes to the gender pay gap. We use administrative and survey data from a large financial institution and exploit quasi-random variation induced by the rotation of managers. We provide evidence that when employees have more face-to-face interactions with their managers, they are promoted at a higher rate. This mechanism could explain a third of the gender gap in promotions at this firm.
Keywords: gender pay gap; social interactions; promotions; manager rotation; quasi-experimental methods
JEL Codes: J01; J16; J7; Z1; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased face-to-face interactions with smoking managers (M54) | higher promotion rates for smoking employees (M51) |
| smoking employees transitioning from a nonsmoking manager to a smoking manager (J62) | promoted more quickly than those transitioning to another nonsmoking manager (J62) |
| smokertosmoker advantage (Y70) | promotion prospects for smoking employees improve significantly when paired with smoking managers (M51) |
| male employees transitioning from female to male managers (J62) | 0.60 pay grade increase at 10 quarters after the transition (J62) |
| male employees are more likely to engage in relationship-building activities with male managers (J29) | male employees experience a promotion advantage (J62) |
| no significant differences in effort or performance metrics between groups (D29) | productivity differences ruled out as a primary explanation for promotion advantages (J62) |