Social Networks, Promotions, and the Glass-Ceiling Effect

41 Pages Posted: 21 Sep 2018

See all articles by Michael Neugart

Michael Neugart

Technische Universität Darmstadt

Anna Zaharieva

Bielefeld University - Department of Business Administration and Economics

Date Written: September 2018

Abstract

Empirical studies show that female workers are under-represented in highest hierarchical positions of companies, which is known as the glass-ceiling effect. In this study we investigate the relationship between social networks and the glass-ceiling effect. Specifically, we develop an equilibrium search and matching model where job ladders consist of three hierarchical levels and social networks are generated endogenously. Male and female workers move up in the hierarchical ladder via job-to-job transitions between firms and internal promotions within firms. They also accumulate experience which is a necessary requirement for applying to jobs in the highest hierarchical level. Open vacancies can be filled by formal matching of applicants to jobs or by referrals, which implies that senior workers recommend their social contacts for the job. Social networks exhibit gender homophily, which reflects the fact that social ties are more likely to be formed between workers of the same gender. In a setting when female workers are the minority, there are too few female contacts in the social networks of their male collegues. This disadvantage implies that female workers are refereed less often for the jobs and under-represented in senior hierarchical positions of firms. We show that referrals via homophilous social networks can explain part of the total wage gap stemming from the glass-ceiling effect in Germany (6,4%). The mechanism is amplified by more hierarchical firms structures, stronger clustering of social networks, and earlier ppromotion times.

Keywords: glass-ceiling effect, networks, discrimination, theory of the firm, promotions, search-and-matching labor market

JEL Classification: D21, D85, J31, J63, J71

Suggested Citation

Neugart, Michael and Zaharieva, Anna, Social Networks, Promotions, and the Glass-Ceiling Effect (September 2018). Bielefeld Working Papers in Economics and Management No. 07-2018. Available at SSRN: https://ssrn.com/abstract=3249419 or http://dx.doi.org/10.2139/ssrn.3249419

Michael Neugart (Contact Author)

Technische Universität Darmstadt ( email )

Hochschulstraße 1
Darmstadt, 64289
Germany

HOME PAGE: http://www.vwl3.wi.tu-darmstadt.de/fachgebiete_10/startseite_6/index.en.jsp

Anna Zaharieva

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany

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