The Control of Managerial Discretion: Evidence from Unionization's Impact on Employment Composition

• In Event: 161 - Section on Organizations, Occupation and Work Roundtable Session (one-hour).
  In Refereed Roundtable: Table 02. Organizational Arrangements and Workplace Practices

Abstract

Does limiting managers’ discretion limit organizations’ scope for discrimination? Social-psychological research argues that it does so by limiting opportunities for the exercise of widely held cognitive biases. Organizational research has found evidence that certain formal, bureaucratic personnel practices that limit discretion and establish accountability for workplace diversity have been associated with the increased presence of women and minorities in managerial positions. However, drawing causal inferences from such studies is complicated by the possibility that adopting such policies is endogenous to a firm’s wish to hire and promote more women and minorities. This study uses unionization elections to conduct a test from which stronger causal inferences can be made. I conduct a regression-discontinuity investigation into unionization’s effect on workforce composition. I find that while unionization is associated with more representative workplaces and more women and minorities in management (comparable to other studies), these effects disappear when considering the most similar cases closest to the discontinuity threshold. Most of the apparent effects of unionization on workforce diversity may be attributable to the unobserved features of establishments where organizing succeeds. This has similar implications for the causal effects of diversity policies adopted by managers.

Author

• John-Paul Ferguson, Stanford University