Referral-based hiring is a commonplace practice for modern organizations, which holds considerable benefits for employees hired based upon a referral, including greater chances for upward mobility within the company. A recent paper published in ILR Review entitled “Lasting Effects? Referrals and Career Mobility of Demographic Groups in Organizations,” further studies the benefits of referral based hiring, and finds that the positive impact does not effect different demographic groups equally. Rather, authors Jennifer Merluzzi and Adina Sterling find that referral-based hiring provides the biggest increase in promotional opportunities for racial minorities. The abstract for the paper:
While prior research has suggested that network-based hiring in the form of referrals can lead to better career outcomes, few studies have tested whether such career advantages differ across demographic groups. Using archival data from a single organization for nearly 16,000 employees over an 11-year period, the authors examine the effect of hiring by referrals on the number of promotions employees receive and the differences in this effect across demographic groups. Drawing on theories of referral-based hiring, inequality, and career mobility, they argue that referral-based hiring provides unique promotion advantages for minorities compared to those hired without a referral. Consistent with this argument, they find that referrals are positively associated with promotions for one minority group, blacks, even after controlling for individual and regional labor market differences. The authors explore the possible mechanism for this finding, with initial evidence pointing to referrals providing a signal of quality for black employees. These results suggest refinement to prior research that attests that referral-based hiring disadvantages racial minorities.
Management structure can have a large impact on the representation of women in management, but which structure is most effective in promoting gender diversity? The answer may surprise you. In the article “The View at the Top or Signing at the Bottom? Workplace Diversity Responsibility and Women’s Representation in Management,” from ILR Review, authors Mary E. Graham, Maura A. Belliveau, and Julie L. Hotchkiss investigated what correlations could be found between different management structures and gender diversity in management. Surprisingly, they found that having an HR executive on the top management team did not necessarily equate to more women in management. The abstract for the article describes their findings:
Women lag men in their representation in management jobs, which negatively affects women’s careers and company performance. Using data from 81 publicly traded firms with more than 2,000 establishments, the authors examine the impact of two management structures that may influence gender diversity in management positions. The authors find no association between the presence of an HR executive on the top management team—a structure envisioned in practice as enhancing diversity but which could, instead, operate merely symbolically—and the proportion of women in management. By contrast, the authors show a strong, positive association between a previously unexamined measure of commitment to diversity—the hierarchical rank of the individual certifying the company’s required, confidential federal EEO-1 report—and women’s representation in management. These findings counter the common perception that the Equal Employment Opportunity Commission (EEOC) regulations are too weak to affect gender diversity. The authors discuss the implications for diversity scholarship, as well as for management practice and public policy.
The authors find that privately held firms owned by women were less likely than those owned by men to downsize their workforces during the Great Recession. Year-to-year employment reductions were as much as 29% smaller at women-owned firms, even after controlling for industry, size, and profitability. Using data that allow the authors to control for additional detailed firm and owner characteristics, they also find that women-owned firms operated with greater labor intensity after the previous recession and were less likely to hire temporary or leased workers. These patterns extend previous findings associating female business leadership with increased labor hoarding.
The authors revisit the long-running minimum wage–employment debate to assess new studies claiming that estimates produced by the panel data approach commonly used in recent minimum wage research are flawed by that approach’s failure to account for spatial heterogeneity. The new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the United States have not reduced employment. The authors explore the ability of the new research designs to isolate reliable identifying information, and they test the designs’ untested assumptions about the construction of better control groups. Their analysis reveals problems with the new research designs. Moreover, using methods that let the data identify the appropriate control groups, their results reaffirm the evidence of disemployment effects, with teen employment elasticities near −0.15. This evidence, they conclude, still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others.
Reich’s main focus is on the institutional legacies that shape how the people working in his cases reconcile the contradictions between their non-economic values and market pressures. The former public hospital’s contradiction is between the scarcity of resources and the practice of providing extensive uncompensated care to underinsured and uninsured patients. The people in this hospital view care as a social right, and Reich interprets their disregard for efficiency and profitability as rebuffing market pressures. In the Catholic hospital, the contradiction is between the values of sacrifice and dignity, with which many in the hospital identify, and management’s marketing of these values to attract high-paying patients, the treatment of uninsured patients with little dignity, and the lowest wages for nurses and ancillary workers among the three cases studied. Reich interprets this case as moralizing market pressures. In the integrated health management organization, customized care according to each patient’s special needs contradicts the organization’s prevailing operating principle of standardizing and rationing care by scaling up efficient practices. Reich interprets this case as taming market pressures through the use of bureaucracy and big data. The author lays out these three types of moral–market relationships by examining the conception of care, the structure of physicians’ work, and the power and division of labor between physicians, nurses, and ancillary workers including the role of labor relations in each of the cases. Another interesting argument in the book is that these three different moral–market relationships correspond to three different historical periods. I find Reich’s well-grounded discussion and critique of the three models highly persuasive.
The August special issue of ILR Review is now available and open to access for the next 30 days! Included in the special issue on Work and Employment Relations in Health Care are papers that discuss the relationship between nurse unions and patient outcomes, the effect of electronic health record adoption on physician productivity, and the impact nurse staffing strategies have on patient satisfaction. In theintroductory editorial essay, Ariel C. Avgar, Adrienne E. Eaton, Rebecca Kolins Givan, and Adam Seth Litwin outline the problems inherent in US health care, most notably the fact that despite outspending other countries on health care costs per capita, the US demonstrates above-average rates of medical errors and below-average life expectancies. As the health care system moves toward reform, the authors argue for careful consideration of how workplace dynamics impact the outcomes for everyone involved in health care. The editorial thus highlights the importance of research on work and employment relations in the health care industry:
This special issue of the ILR Review is designed to showcase the central role that work organization and employment relations play in shaping important outcomes such as the quality of care and organizational performance. Each of the articles included in this special issue makes an important contribution to our understanding of the large and rapidly changing health care sector. Specifically, these articles provide novel empirical evidence about the relationship between organizations, institutions, and work practices and a wide array of central outcomes across different levels of analysis. This breadth is especially important because the health care literature has largely neglected employment-related factors in explaining organizational and worker outcomes in this industry. Individually, these articles shed new light on the role that health information technologies play in affecting patient care and productivity (see Hitt and Tambe; Meyerhoefer et al.); the relationship between work practices and organizational reliability (Vogus and Iacobucci); staffing practices, processes, and outcomes (Kramer and Son; Hockenberry and Becker; Kossek et al.); health care unions’ effects on the quality of patient care (Arindrajit, Kaplan, and Thompson); and the relationship between the quality of jobs and the quality of care (Burns, Hyde, and Killet). Below, we position the articles in this special issue against the backdrop of the pressures and challenges facing the industry and the organizations operating within it. We highlight the implications that organizational responses to industry pressures have had for organizations, the patients they care for, and the employees who deliver this care.
In this book, he [François Bourguignon] has produced a concise and nontechnical masterpiece of exceptional analytical and policy clarity. His professional expertise and policy involvement shine through in every chapter. Although the book is written for concerned global citizens, professional economists and other social scientists can learn much from reading it.
Bourguignon begins by posing some provocative questions. Is globalization responsible for rising inequality in the world? Does this represent the death knell for equality? If it continues, will the quest for social justice be squelched?
His analysis makes a crucial distinction between three types of inequality in standards of living: inequality between countries, inequality within countries, and inequality among the world’s people. It is the last of these—what he terms “global inequality”—that is his primary concern and is at the heart of the book.
Our contribution to the ILR Review was motivated by a background study of IZA contributing to the Worldbank’s World Development Report on Jobs in 2013. We started from the observation that young people have been among those most affected by the 2008/09 financial crisis and its aftermath in many world regions. While the recession led to steep increases in youth unemployment, policies aimed at stimulating labor demand do not fully tackle the root of the problem. Rather, we also need to understand the institutions governing the transition from school to work. Vocational education and training (VET) is often viewed as the silver bullet for the youth joblessness problem. In this article, we provide a better understanding of VET in industrialized countries, proposing a typology with three types of vocational systems: 1) vocational and technical schools, 2) formal apprenticeships, and 3) dual apprenticeship systems that combine school training with a firm-based approach. We first describe the strengths and challenges of each system. Then we review the evidence of the effectiveness of VET versus general education and the relative effectiveness of the different VET systems. In our view the results indicate that VET is a valued alternative beyond the core of general education and that the use of apprenticeships combined with institutional learning tends to be more effective than school-based VET. Hence, improving the performance of VET can be one element of a medium-run solution to difficult school-to-work transitions.
The abstract for the paper:
Young people have been among those most affected by the recent financial crisis. Vocational education and training (VET) is often viewed as the silver bullet for the youth joblessness problem. In this article, the authors provide a better understanding of VET in industrialized countries, proposing a typology with three types of vocational systems: 1) vocational and technical schools, 2) formal apprenticeships, and 3) dual apprenticeship systems that combine school training with a firm-based approach. They first describe the strengths and challenges of each system. They subsequently review the evidence of the effectiveness of VET versus general education and the relative effectiveness of the different VET systems. Results indicate that VET is a valued alternative beyond the core of general education and that the use of apprenticeships combined with institutional learning tends to be more effective than school-based VET.
*Werner Eichhorst is affiliated with IZA. Núria Rodríguez-Planas is affiliated with Queens College of CUNY and the Institute for the Study of Labor (IZA). Ricarda Schmidl is affiliated with the University of Mannheim and IZA. Klaus F. Zimmermann is affiliated with IZA and Bonn University. We thank Costanza Biavaschi, Corrado Giulietti, Michael Kendzia, Alexander Muravyev, Victoria Finn, and Janneke Pieters for their input and support. Inquiries can be directed to email@example.com or Eichhorst@iza.org.