Recent arguments that employment growth occurs is proportionately at small establishments are fundamentally misleading because they confuse regression to the mean with structural shifts in the size distribution of establishments and with an aging effect within cohorts.

The unionized sector is often thought of as the dominant focus of wage rigidity and hence employment instability in Keynesian models that attribute unemployment to rigid wages. Where the price mechanism is frozen, quantity changes are amplified. This paper compares intertemporal employment variability during the 1970's at union and non-union plants, and finds no greater cyclical or residual employment variation in union than in non-union plants.

Employee diversity may affect business performance both as a result of customer discrimination and as a result of how members of a group work with each other in teams. We test for both channels with data from more than 800 retail stores employing over 70,000 individuals matched to Census data on the demographics of the community. We find little payoff to matching employee demographics to those of potential customers except when the customers do not speak English. Although age diversity does predict lower sales, diversity of race or gender within the workplace does not significantly or substantially affect sales or sales growth.

Using data from a large U.S. retail firm, we examine how racial matches between managers and their employees affect rates of employee quits, dismissals and promotions. We exploit changes in management at hundreds of stores to estimate hazard models with store fixed effects that control for all unobserved differences across store locations. We find a general pattern of own-race bias across all outcomes in that employees usually have better outcomes when they are the same race as their manager. But we do find anomalies in this pattern, particularly when the manager-employee match violates traditional racial hierarchies (e.g. nonwhites managing whites).

Using personnel data from a large U.S. retail firm, we examine whether the race of the hiring manager affects the racial composition of new hires. We exploit manager changes at hundreds of stores to estimate models with store fixed effects. We find significant effects of manager race and ethnicity. First, all non-black managersi.e., whites, Hispanics, and Asianshire more whites and fewer blacks than do black managers. The differences between non-black and black managers are especially large in the South. Second, in locations with large Hispanic populations, Hispanic managers hire more Hispanics and fewer whites than white managers.

Employee diversity may affect business performance both as a result of customer discrimination and as a result of how members of a group work with each other in teams. We test for both channels with data from more than 800 retail stores employing over 70,000 individuals, matched to Census data on the demographics of the community. We find little payoff to matching employee demographics to those of potential customers except when the customers do not speak English. Diversity of race or gender within the workplace does not predict sales or sales growth, although age diversity predicts low sales.

Using personnel data from a large U.S. retail firm, we examine whether the race of the hiring manager affects the racial composition of new hires. We exploit manager changes at hundreds of stores to estimate models with store fixed effects. We find significant effects of manager race and ethnicity. First, all non-black managers—i.e., whites, Hispanics, and Asians—hire more whites and fewer blacks than do black managers. The differences between non-black and black managers are especially large in the South. Second, in locations with large Hispanic populations, Hispanic managers hire more Hispanics and fewer whites than white managers.

Using data from a large U.S. retail firm, we examine how differences in race, age, and gender between a manager and a subordinate affect the subordinate’s rate of quits, dismissals, and promotions. We find that these demographic differences can have statistically significant and sometimes large effects on employment outcomes. This is especially true of differences in race and ethnicity, which consistently produce significant effects and which produce the largest effects. In general, demographic differences tend to produce adverse effects on employment outcomes (i.e., higher quit and dismissal rates, and lower promotion rates). But in three striking cases, where traditionally lower-status managers are supervising traditionally higher-status employees, differences produce favorable effects for employees.