Amalia Rebecca Miller, Georgia S. Bankard Professor of Economics, University of Virginia

Carmit Segal, Professor of Managerial Economics, University of Zurich

Ultra-competitive workplaces – places where employees battle against each other for rank, bonuses and promotions – are common in many high-status fields, including law and finance. But while having a highly competitive culture is, on its face, gender-neutral, it actually worsens gender inequality.

That’s the key finding of our new study with colleague Ragan Petrie, published in the most recent issue of the ILR Review. As economists who study workplace diversity and career-family conflicts for women, we wanted to investigate how competition at work plays out in people’s lives. We couldn’t just compare people with more and less competitive jobs, because they differ in a lot of other ways as well. So we set up a few experiments.

In our first experiment, which took place at a college library, we hired more than 200 people for a one-time research assistant job to be performed over a single hourlong session for a $25 payment. When workers arrived, we divided them into groups of four – each with two men and two women – and set them to work testing a computer program that was designed to be used in economics research.

During their training, we told workers they would be paid the $25 salary as long as they worked for at least 10 minutes – but we also asked them to work as long and hard as they could. We explained the purpose of the job was to measure how well people can perform the task over time, so the longer the workers stayed, the more useful their work would be.

In some randomly selected sessions, we also offered our main treatment: a competitive, high-stakes bonus of $30 paid to the worker in that group who earned the most points. Workers accumulated points by clicking on squares that periodically appeared on their screens. The only way to earn more points was by staying longer and trying harder.

Although we found that social and intrinsic motivations were enough to get most workers to stay beyond the required work time, offering the $30 bonus prize induced people to work for much longer. More than half of the bonus-eligible workers stayed on task for 40 minutes, the maximum time permitted, and work times increased by 83% overall.

Because these bonus payments reduced the costs of extracting effort by a third, they would have been very profitable to a real employer.

We also found that the high-stakes prize created gender gaps in effort (work time), output (points earned) and pay that weren’t present in other conditions. This result shows that gender differences found in limited-time contests are also present when people can choose how long to work.

In our second experiment, we told more than 700 applicants for a job testing the same computer program about the possibility of a bonus, and we asked them to choose between a fixed overtime wage rate and tournaments with varying prize levels. Men and women were both increasingly likely to opt into the tournament at higher prize levels, but men responded much more than women to rising prize levels.

In other words, as the stakes rose, the gender gap in tournament entry grew.

Why it matters

Our research suggests that highly competitive workplaces worsen gender inequality in two ways. The first is that women are less willing to enter and persist in high-stakes tournaments. Our findings here are consistent with previous research showing that women are less attracted than men to competitive work environments and tend to perform worse in them.

Our finding that workplace competition increases work hours across the board suggests a second, indirect way that it stymies women’s careers. The fact that women do more unpaid caretaking and household work than men means they are less able to devote the long hours needed to outperform co-workers. This suggests that competition produces the “greedy” jobs that demand undivided commitment from workers recently highlighted by Nobel Prize-winning economist Claudia Goldin as a major barrier to gender equality.

What still isn’t known

While researchers are getting a better understanding of the problem, solutions remain elusive. Our research shows that workplace competition can be a great profit driver for employers and is attractive to some workers. That means fixing the problem will be difficult.

Our findings suggest that remote-work technologies may not be as effective as hoped at eliminating long work hours – and the resulting gender pay gaps – at elite jobs. They also suggest that encouraging women to enter and persist in competitive occupations, while important, isn’t enough to ensure they succeed.

Assuming that workplace competition remains a central feature of elite jobs, making more equitable workplaces won’t be easy. But maybe we don’t need to make that assumption in the first place. It may be worthwhile for employers to consider noncompetitive alternatives for motivating workers – for example, using performance measures that aren’t based on rank order comparisons, when possible. We encourage researchers to investigate these alternatives.

The Research Brief is a short take on interesting academic work.

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