Zoë Cullen joined the Entrepreneurial Management Unit as an Assistant Professor in July of 2018.
Zoë received her Ph.D in Economics from Stanford in June 2016, and worked as the Chief Economist at an Asian Bank leading up to her appointment at HBS.
Alexander Bartik, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca and Christopher Stanton
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.
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 their 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 provide suggestive evidence that social interactions
are important even among male employees: 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 limited diffusion of salary information has implications for labor markets, such as wage discrimination policies and collective bargaining. Access to salary information is believed to be limited and unequal, but there is little direct evidence on the sources of these information frictions. Social scientists have long conjectured that privacy norms around salary (i.e., the “salary taboo”) play an important role. We provide unique evidence of this phenomenon based on a field experiment with 755 employees at a multibillion-dollar corporation. We provide revealed-preference evidence that many employees are unwilling to reveal their salaries to coworkers and reluctant to ask coworkers about their salaries. These frictions are still present, but smaller in magnitude, when sharing information that is less sensitive (seniority information). We discuss implications for pay transparency policies and the gender wage gap.
The vast majority of the pay inequality in an organization comes from differences in pay between employees and their bosses. But are employees aware of these pay disparities? Are employees demotivated by this inequality? To address these questions, we conducted a field experiment with a sample of 2,060 employees from a multibillion-dollar corporation. We make use of the firm’s administrative records alongside survey data and information-provision experiments. First, we document large misperceptions among the employees about the salaries of their managers and smaller but still significant misperceptions of the salaries of their peers. Second, we show that these perceptions have a significant causal effect on the employees’ own behavior. When they find out that their managers earn more than they thought, employees work harder on average. We provide evidence that these effects are consistent with career-concerns models. In contrast, employees work less hard when they find out that their peers earn more. We conclude by discussing implications for pay inequality and pay transparency.
The public discourse around pay transparency has focused on the direct effect: how workers seek
to rectify newly disclosed pay inequities through renegotiations. The question of how wage-setting,
bargaining, and hiring practices change with higher transparency has received less attention. To
study these outcomes, we combine a dynamic wage-bargaining model with data from online labor
markets for low-skill, temporary jobs. We exploit naturally occurring variation in pay transparency
as well as experimentally-induced variation. Wages are more equal, but lower under transparency.
An increase in transparency raises the hiring rate when workers have sufficient bargaining power.
Employer profits rise with transparency, increasing 27% in a field experiment. A key insight is
that increasing transparency decreases the bargaining power of workers, as employers credibly
refuse to pay high wages to any one worker to avoid costly renegotiations with others. We discuss
implications for the gender wage gap and employers' endogenous transparency choices.
This paper studies the growth of online peer-to-peer markets. Using data from TaskRabbit, a rapidly expanding marketplace for domestic tasks, we show that growth is highly heterogeneous across cities, which is a common feature of peer-to-peer markets for local services. To disentangle the potential drivers of growth, we present a general model of a frictional market for services, and estimate it using variation in the number of buyers and sellers present on the marketplace over time and across cities. First, we find that supply is highly elastic: in periods when demand doubles, sellers work almost twice as hard, prices hardly increase and the probability of requested tasks being matched only slightly falls. The first result implies that in markets where supply can accommodate wide fluctuations in demand, growth relies on attracting buyers at a faster rate than sellers. Second, we show that cities where the market fundamentals promote efficient matching of buyers and sellers are also the cities that grow fast in the number of buyers. This heterogeneity in matching efficiency is not attributable to scale economies, but is instead related to two measures of market thickness: geographic density (buyers and sellers living close together), and level of task standardization (buyers requesting homogeneous tasks). The second result implies that when network effects are limited by the local and time-sensitive nature of the services exchanged, growth of peer-to-peer markets largely depends on strategic geographic expansion.
