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What Types of Diversity Benefit Workers? Empirical Evidence on the Effects of Co-Worker Dissimilarity on the Performance of Employees

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  • Fidan Ana Kurtulus

    ()
    (University of Massachusetts Amherst)

Abstract

This paper explores the consequences of grouping workers into diverse divisions on the performance of employees using a dataset containing the detailed personnel records of a large U.S. firm from 1989-1994. In particular, I examine the effects of demographic dissimilarity among co-workers, namely differences in age, gender and race among employees who work together within divisions, and non-demographic dissimilarity, namely differences in education, work function, firm tenure, division tenure, performance and wages among employees within divisions. I find evidence that age dissimilarity, dissimilarity in firm tenure, and performance dissimilarity are associated with lower worker performance, while wage differences are associated with higher worker performance. My analysis also reveals that the effects of certain types of dissimilarities get smaller in magnitude the longer a worker is a part of a division. Finally, the paper provides evidence that the relationships between performance and the various measures of dissimilarity vary by occupational area and division size. JEL Categories: D2, J1, J2, J3, J8, L2, M5

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Bibliographic Info

Paper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2011-11.

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Date of creation: Jun 2011
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Handle: RePEc:ums:papers:2011-11

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Related research

Keywords: Work-Group Diversity; Communication Costs; Knowledge Spillovers; Specialization; Worker Performance;

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References

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  1. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-17, August.
  2. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
  3. Milgrom, Paul R., 1987. "employment contracts, influence activities and efficient organization design," Department of Economics, Working Paper Series qt6pf6c5j6, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. Becker, G.S. & Murphy, K.M., 1991. "The Division of Labor, Coordination Costs, and Knowledge," University of Chicago - Economics Research Center 92-5, Chicago - Economics Research Center.
  5. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  6. Daniel S. Hamermesh, 1990. "Shirking or Productive Schmoozing: Wages and the Allocation of Time at Work," NBER Working Papers 2800, National Bureau of Economic Research, Inc.
  7. Edward P. Lazear, 1998. "Globalization and the Market for Teammates," NBER Working Papers 6579, National Bureau of Economic Research, Inc.
  8. James L. Medoff & Katharine G. Abraham, 1980. "Experience, Performance, and Earnings," NBER Working Papers 0278, National Bureau of Economic Research, Inc.
  9. Canice Prendergast & Robert H. Topel, 1993. "Favoritism in Organizations," NBER Working Papers 4427, National Bureau of Economic Research, Inc.
  10. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-80, June.
  11. Kato, Takao & Shu, Pian, 2008. "Performance Spillovers and Social Network in the Workplace: Evidence from Rural and Urban Weavers in a Chinese Textile Firm," IZA Discussion Papers 3340, Institute for the Study of Labor (IZA).
  12. Jonathan S. Leonard & David I. Levine, 2006. "Effect of diversity on turnover: A large case study," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(4), pages 547-572, July.
  13. Finis Welch, 1967. "Labor-Market Discrimination: An Interpretation of Income Differences in the Rural South," Journal of Political Economy, University of Chicago Press, vol. 75, pages 225.
  14. Lang, Kevin, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 363-82, May.
  15. Michael Gibbs & Wallace Hendricks, 2004. "Do formal salary systems really matter?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 58(1), pages 71-93, October.
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Cited by:
  1. Andrea Garnero & François Rycx, 2013. "The heterogeneous effects of workforce diversity on productivity, wages and profits," DULBEA Working Papers 13-04, ULB -- Universite Libre de Bruxelles.
  2. Kato, Takao & Shu, Pian, 2011. "Competition, Group Identity, and Social Networks in the Workplace: Evidence from a Chinese Textile Firm," IZA Discussion Papers 6219, Institute for the Study of Labor (IZA).
  3. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, vol. 66(C), pages 144-179.

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