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Working Hours, Promotion and the Gender Gap in the Workplace

Listed author(s):
  • Kato, Takao

    ()

    (Colgate University)

  • Ogawa, Hiromasa

    ()

    (National Graduate Institute for Policy Studies Japan)

  • Owan, Hideo

    ()

    (University of Tokyo)

This paper presents a novel model of promotion within the firm which sheds new light on the interplay between working hours and the odds of subsequent promotion. The model's key feature is the coexistence of two different sources of asymmetric information: (i) the worker's cost of long working hours: and (ii) the worker's OJT ability (the worker's ability to accumulate valuable human capital on the job through learning by doing). The worker's cost of working long hours is known only to the worker, while the worker's OJT ability is accurately assessed only by the firm observing him/her on the job. Long working hours signal the worker's commitment to the firm, which determines the surplus produced when the worker is promoted. Thus, the firm provides the worker with managerial training only after observing the employee's hours worked, a signal of his/her commitment to the firm or lack thereof. The firm's decision to provide training also depends on its private information about the worker's OJT ability, which affects his/her future productivity if and when the worker gets promoted. Upon completion of training, the firm then promotes the worker. The model illuminates under what conditions, it is efficient for the firm to adopt the information revelation strategy – reveal its private information on the worker's OJT ability to him/her before the worker decides on whether to work long hours and signal his/her commitment. Using the model, we show that under a reasonable set of conditions, the firm may find it optimal to adopt the information revelation strategy for women but not for men, and derive an empirical testable hypothesis that the correlation between working hours and subsequent promotion will be stronger for women than for men. We analyze longitudinal personnel data from a large Japanese manufacturing firm and provide rigorous econometric evidence in support of the hypothesis.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10454.

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Length: 64 pages
Date of creation: Dec 2016
Handle: RePEc:iza:izadps:dp10454
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  1. Asai, Yukiko, 2015. "Parental leave reforms and the employment of new mothers: Quasi-experimental evidence from Japan," Labour Economics, Elsevier, vol. 36(C), pages 72-83.
  2. Dora Gicheva, 2013. "Working Long Hours and Early Career Outcomes in the High-End Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 31(4), pages 785-824.
  3. David Bjerk, 2008. "Glass Ceilings or Sticky Floors? Statistical Discrimination in a Dynamic Model of Hiring and Promotion," Economic Journal, Royal Economic Society, vol. 118(530), pages 961-982, 07.
  4. Cassidy, Hugh & DeVaro, Jed & Kauhanen, Antti, 2016. "Promotion signaling, gender, and turnover: New theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 140-166.
  5. Prendergast, Canice, 1992. "Career development and specific human capital collection," Journal of the Japanese and International Economies, Elsevier, vol. 6(3), pages 207-227, September.
  6. Nina Smith & Valdemar Smith & Mette Verner, 2013. "Why are So Few Females Promoted into CEO and Vice President Positions? Danish Empirical Evidence, 1997–2007," ILR Review, Cornell University, ILR School, vol. 66(2), pages 380-408, April.
  7. Tuomas Pekkarinen & Juhana Vartiainen, 2006. "Gender Differences in Promotion on a Job Ladder: Evidence from Finnish Metalworkers," ILR Review, Cornell University, ILR School, vol. 59(2), pages 285-301, January.
  8. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
  9. Landers, Renee M & Rebitzer, James B & Taylor, Lowell J, 1996. "Rat Race Redux: Adverse Selection in the Determination of Work Hours in Law Firms," American Economic Review, American Economic Association, vol. 86(3), pages 329-348, June.
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