IDEAS home Printed from https://ideas.repec.org/p/sol/wpaper/2013-143122.html
   My bibliography  Save this paper

The heterogeneous effects of workforce diversity on productivity, wages and profits

Author

Listed:
  • Andrea Garnero
  • François Rycx

Abstract

We estimate the impact of workforce diversity on productivity, wages and productivity-wage gaps (i.e. profits) using detailed Belgian linked employer-employee panel data. Findings, robust to a large set of covariates, specifications and econometric issues, show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. The consequences of gender diversity are found to depend on the technological/knowledge environment of firms. While gender diversity generates significant gains in high-tech/knowledge intensive sectors, the opposite result is obtained in more traditional industries. Overall, findings do not point to sizeable productivity-wage gaps except for age diversity.

Suggested Citation

  • Andrea Garnero & François Rycx, 2013. "The heterogeneous effects of workforce diversity on productivity, wages and profits," Working Papers CEB 13-015, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/143122
    as

    Download full text from publisher

    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/143122/1/wp13015.pdf
    File Function: wp13015
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Haile, Getinet Astatike, 2012. "Unhappy working with men? Workplace gender diversity and job-related well-being in Britain," Labour Economics, Elsevier, vol. 19(3), pages 329-350.
    2. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    3. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2010. "Does Labor Diversity Affect Firm Productivity?," Working Papers 10-12, University of Aarhus, Aarhus School of Business, Department of Economics.
    4. Fidan Ana Kurtulus, 2012. "Affirmative Action and the Occupational Advancement of Minorities and Women During 1973–2003," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51(2), pages 213-246, April.
    5. Garnero, Andrea & Kampelmann, Stephan & Rycx, Francois, 2013. "Part-time Work, Wages and Productivity: Evidence from Belgian Matched Panel Data," IZA Discussion Papers 7789, Institute for the Study of Labor (IZA).
    6. Pekka Ilmakunnas & Seija Ilmakunnas, 2011. "Diversity at the Workplace: Whom Does it Benefit?," De Economist, Springer, vol. 159(2), pages 223-255, June.
    7. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    8. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    9. Navon, Guy, 2009. "Human Capital Spillovers in the Workplace: Labor Diversity and Productivity," MPRA Paper 17741, University Library of Munich, Germany.
    10. Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 247-285, April.
    11. Fidan Ana Kurtulus, 2011. "What Types of Diversity Benefit Workers? Empirical Evidence on the Effects of Co-Worker Dissimilarity on the Performance of Employees," UMASS Amherst Economics Working Papers 2011-11, University of Massachusetts Amherst, Department of Economics.
    12. Haile, Getinet Astatike, 2009. "Unhappy Working with Men? Workplace Gender Diversity and Employee Job-Related Well-Being in Britain: A WERS2004 Based Analysis," IZA Discussion Papers 4077, Institute for the Study of Labor (IZA).
    13. Christian Göbel & Thomas Zwick, 2012. "Age and Productivity: Sector Differences," De Economist, Springer, vol. 160(1), pages 35-57, March.
    14. Vegard Skirbekk, 2004. "Age and Individual Productivity: A Literature Survey," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 2(1), pages 133-154.
    15. Judith K. Hellerstein & David Neumark, 1995. "Are Earnings Profiles Steeper Than Productivity Profiles? Evidence from Israeli Firm-Level Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 89-112.
    16. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    17. Judith K. Hellerstein & David Neumark, 2007. "Production Function and Wage Equation Estimation with Heterogeneous Labor: Evidence from a New Matched Employer-Employee Data Set," NBER Chapters,in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 31-71 National Bureau of Economic Research, Inc.
    18. Fidan Ana Kurtulus, 2011. "What Types of Diversity Benefit Workers? Empirical Evidence on the Effects of Co-worker Dissimilarity on the Performance of Employees," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(4), pages 678-712, October.
    19. Lazear, Edward P, 1999. "Globalisation and the Market for Team-Mates," Economic Journal, Royal Economic Society, vol. 109(454), pages 15-40, March.
    20. Andrea Garnero & Stephan Kampelmann & François Rycx, 2014. "Part-Time Work, Wages, and Productivity," ILR Review, Cornell University, ILR School, vol. 67(3), pages 926-954, July.
    21. Vandenberghe, V., 2013. "Are firms willing to employ a greying and feminizing workforce?," Labour Economics, Elsevier, vol. 22(C), pages 30-46.
    22. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    23. Shoba Arun & Thankom Arun, 2002. "ICTs, gender and development: women in software production in Kerala," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(1), pages 39-50.
    24. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-446, July.
    25. repec:iso:wpaper:0158 is not listed on IDEAS
    26. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    27. van Ark, Bart, 1998. "Productivity," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 171-174, June.
    28. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jozef Konings & Luca Marcolin, 2014. "Do wages reflect labor productivity? The case of Belgian regions," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-21, December.
    2. Rycx, Francois & Saks, Yves & Tojerow, Ilan, 2016. "Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data," IZA Discussion Papers 10336, Institute for the Study of Labor (IZA).
    3. Marc Gürtler & Oliver Gürtler, 2015. "The Optimality of Heterogeneous Tournaments," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 1007-1042.
    4. Beaurain, Guillaume & Masclet, David, 2016. "Does affirmative action reduce gender discrimination and enhance efficiency? New experimental evidence," European Economic Review, Elsevier, vol. 90(C), pages 350-362.
    5. John S. Heywood & Uwe Jirjahn, 2015. "The German Labor Market for Older Workers in Comparative Perspective," Research Papers in Economics 2015-02, University of Trier, Department of Economics.
    6. repec:eee:advacc:v:37:y:2017:i:c:p:94-102 is not listed on IDEAS
    7. Romina Giuliano & Stephan Kampelmann & Benoît Mahy & François Rycx, 2017. "Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 421-449, June.
    8. Grinza, Elena & Kampelmann, Stephan & Rycx, Francois, 2018. "L'union fait la force? Evidence for Wage Discrimination in Firms with High Diversity," IZA Discussion Papers 11520, Institute for the Study of Labor (IZA).
    9. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2014. "Labor diversity and firm productivity," European Economic Review, Elsevier, vol. 66(C), pages 144-179.
    10. Vincent Vandenberghe, 2015. "Is Workforce Diversity Good for Efficiency?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2015015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    11. Stephan Kampelmann & François Rycx, 2016. "Wage discrimination against immigrants: measurement with firm-level productivity data," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-24, December.
    12. John S. Heywood & Uwe Jirjahn, 2016. "The hiring and employment of older workers in Germany: a comparative perspective
      [Die Beschäftigung und Neueinstellung älterer Arbeitnehmer in Deutschland: Eine vergleichende Perspektive]      ," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(4), pages 349-366, December.
    13. Lone Engbo Christiansen & Huidan Huidan Lin & Joana Pereira & Petia Topalova & Rima Turk, 2016. "Gender Diversity in Senior Positions and Firm Performance; Evidence from Europe," IMF Working Papers 16/50, International Monetary Fund.
    14. repec:eee:joecag:v:1-2:y:2013:i::p:72-82 is not listed on IDEAS
    15. International Monetary Fund, 2016. "Italy; Selected Issues," IMF Staff Country Reports 16/223, International Monetary Fund.
    16. Artz, Benjamin & Taengnoi, Sarinda, 2016. "Do women prefer female bosses?," Labour Economics, Elsevier, vol. 42(C), pages 194-202.
    17. repec:bla:indres:v:56:y:2017:i:4:p:555-604 is not listed on IDEAS

    More about this item

    Keywords

    Labour diversity; productivity; wages; linked panel data; GMM;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sol:wpaper:2013/143122. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels). General contact details of provider: http://edirc.repec.org/data/cebulbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.