The Old Boys' Club: Schmoozing and the Gender Gap

Zoë B. Cullen; Ricardo  Perez-Truglia

Working Paper | 2020

The Old Boys' Club: Schmoozing and the Gender Gap

by Zoë B. Cullen and Ricardo Perez-Truglia

Abstract

Offices are social places. Employees and managers take coffee breaks together, go to lunch, hang out over drinks, and talk about family and hobbies. In this study, we provide evidence that employees’ social interactions with their managers can be advantageous for their careers and that this phenomenon can contribute to the gender pay gap. We use administrative and survey data from a large financial institution. We conduct an event-study analysis of manager rotation to estimate the causal effect of managers’ gender on their employees’ career progressions. We find that male employees assigned to male managers were promoted faster in the following years than male employees assigned to female managers; female employees, on the contrary, had the same career progression regardless of their managers’ gender. These differences were not accompanied by any differences in effort or performance, and they explain a third of the gender gap in promotions at this firm. Then, we provide evidence suggesting that these effects were mediated by the social interactions between male employees and male managers. First, we show that the effects were present only among employees who worked in close proximity to their managers. Second, we show that the effects coincided with an uptick in the share of breaks taken with the managers. Third, we estimate the impact of social interactions on career progression using quasi-random variation induced by smoking habits. When male employees who smoke transitioned to male managers who smoke, they took breaks with their managers more often and were subsequently promoted at higher rates than male smokers who transitioned to non-smoking managers. The boost in socialization and promotion rates closely mirrors the pattern among male employees assigned a male manager.

Keywords: career; promotions; Socialization; Networking; Gender; Personal Development and Career; Wages; Social and Collaborative Networks;

Language: English

Format: Print

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Citation:

Cullen, Zoë B., and Ricardo Perez-Truglia. "The Old Boys' Club: Schmoozing and the Gender Gap." Working Paper.

The Paycheck Protection Program (PPP) aimed to quickly deliver hundreds of billions of dollars of loans to small businesses, with the loans administered via private banks. In this paper, we use firm-level data to document the demand and supply of PPP funds. Using an instrumental variables approach, we find that PPP loans led to a 14 to 30 percentage point increase in a business’s expected survival, and a positive but imprecise effect on employment. Moreover, the effects on survival were heterogeneous and highlight an important tradeoff faced by policymakers: while administering the loans via private banks allowed for rapid delivery of funds, it also limited the government’s ability to target the funding—instead allowing pre-existing connections between businesses and banks to determine which firms would benefit from the program.

To explore the impact of COVID on small businesses, we conducted a survey of more than 5,800 small businesses between March 28 and April 4, 2020. Several themes emerged. First, mass layoffs and closures had already occurred—just a few weeks into the crisis. Second, the risk of closure was negatively associated with the expected length of the crisis. Moreover, businesses had widely varying beliefs about the likely duration of COVID-related disruptions. Third, many small businesses are financially fragile: the median business with more than $10,000 in monthly expenses had only about two weeks of cash on hand at the time of the survey. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the program, such as bureaucratic hassles and difficulties establishing eligibility. Using experimental variation, we also assess take-up rates and business resilience effects for loans relative to grants-based programs.

Working Paper | HBS Working Paper Series | 2020

What Jobs Are Being Done at Home During the COVID-19 Crisis? Evidence from Firm-Level Surveys

Alexander Bartik, Zoë Cullen, Edward L. Glaeser, Michael Luca and Christopher Stanton

The threat of COVID-19 has increased the health risks of going to an office or factory, leading more workers to do their jobs remotely. In this paper, we provide results from firm surveys on both small and large businesses on the prevalence and productivity of remote work, and expectations about the persistence of remote work once the COVID-19 crisis ends. We present four main findings. First, while overall levels of remote work are high, there is considerable variation across industries. The Dingel and Neiman (2020) measure of suitability for remote work does a remarkably good job of predicting the industry level patterns of remote work—highlighting the challenge of moving many industries to remote work. Second, remote work is much more common in industries with better educated and better paid workers. Third, in our larger survey, employers think that there has been less productivity loss from remote working in better educated and higher paid industries. Fourth, more than one-third of firms that had employees switch to remote work believe that that remote work will remain more common at their company even after the COVID-19 crisis ends.

Keywords: COVID-19; remote work; Health Pandemics; Jobs and Positions; Demographics; Surveys;

Citation:

Bartik, Alexander, Zoë Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "What Jobs Are Being Done at Home During the COVID-19 Crisis? Evidence from Firm-Level Surveys." Harvard Business School Working Paper, No. 20-138, June 2020. View Details

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The Old Boys' Club: Schmoozing and the Gender Gap

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