Agency and Workplace Diversity: Evidence from a Two-Sided Audit

103 Pages Posted: 21 May 2020 Last revised: 3 Nov 2020

See all articles by Bo Cowgill

Bo Cowgill

Columbia University - Columbia Business School

Patryk Perkowski

Columbia University - Columbia Business School

Date Written: April 25, 2020

Abstract

Whose preferences drive labor market sorting? We present a simple model of hiring that illustrates the role of intermediaries, worker preferences and employer preferences. These factors are unaccounted for in traditional resume audit studies, leading to ambiguity about interpretation. We introduce a novel field experimental paradigm (a "two-sided audit") to strengthen audit methodology. Our experimental paradigm allows researchers to measure key theoretical mechanisms, to improve statistical power, to address ethical critiques of audit studies, and to estimate the effects of employer policy changes. We then execute a two-sided audit study based on our theory model. Our design uses a prominent modern labor market intermediary (the recruitment process outsourcing industry) to create demand-side variation and to collect additional candidate outcomes. Our findings highlight the role of agency problems and intermediary incentives, which shape the distribution of workers' bargaining power. Career concerns lead recruiters to misallocate callbacks by catering to demand-side preferences for alumni of big companies and elite schools. These candidates are subject to lower standards of mutual interest and are thus "over-interviewed" relative to their probability of joining the firm. By granting more outside offers compared to the likelihood of joining, recruiters' career concerns change the distribution of candidates' negotiating leverage with employers.

Suggested Citation

Cowgill, Bo and Perkowski, Patryk, Agency and Workplace Diversity: Evidence from a Two-Sided Audit (April 25, 2020). Columbia Business School Research Paper No. 898, Available at SSRN: https://ssrn.com/abstract=3584919 or http://dx.doi.org/10.2139/ssrn.3584919

Bo Cowgill (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Patryk Perkowski

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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