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A missed opportunity? Labor demand and workforce diversity

Author

Listed:
  • Anna Bindler
  • Barbara Boelmann
  • Lena Janys
  • Luisa H. Santiago Wolf

Abstract

How do labor demand shocks affect workforce diversity in the absence of targeted diversity policies? A conceptual framework illustrates the potential trade-off between the demographic and quality composition of a workforce when there is a positive labor demand shock. Exploiting the German reunification as a natural experiment, we analyze the academic labor market where nearly all social sciences professors in East Germany were replaced while STEM faculty remained largely unchanged. Using administrative data and a regional difference-in-differences design, we find increased dispersion in the institutional quality of hires, indicating that the new hires came from less select departments. At the same time, female representation did not increase despite qualified women in the pipeline. Instead, East German hiring patterns converged to those in West Germany in terms of gender composition. In simulations, we investigate implied losses: Under conservative assumptions, we show that, considering the pipeline of qualified applicants, the marginal female hire's quality is approximately half a standard deviation higher than the marginal male hire's quality.

Suggested Citation

  • Anna Bindler & Barbara Boelmann & Lena Janys & Luisa H. Santiago Wolf, 2026. "A missed opportunity? Labor demand and workforce diversity," Papers 2606.23150, arXiv.org.
    • Handle: RePEc:arx:papers:2606.23150
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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-

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