International Finance Discussion Papers (IFDP)
September 2021 (Revised October 2022)
Making the Elite: Top Jobs, Disparities, and Solutions
Abstract:
How do socioeconomically unequal screening practices impact access to elite firms and what policies might reduce inequality? Using personnel data from elite U.S. and European multinational corporations recruiting from an elite Indian college, I show that caste disparities in hiring do not arise in many job search stages, including: applications, application reading, written aptitude tests, large group debates that assess socio-emotional skills, and job choices. Rather, disparities arise in the final round, comprising non-technical personal interviews that screen on family background, neighborhood, and "cultural fit." These characteristics are plausibly weakly correlated with productivity (at the interview round) but strongly correlated with caste. Employer willingness to pay for an advantaged caste is as large as that for a full standard deviation increase in college GPA. A hiring subsidy that eliminates the caste penalty would be more cost-effective in diversifying elite hiring than equalizing the caste distribution of pre-college test scores or enforcing hiring quotas.
Keywords: Discrimination, Inequality, Elite Labor Markets, Multinational Corporations, Organizational Practices, Personnel Screening, Personal Interviews, Cultural Fit, Hiring Discretion
DOI: https://doi.org/10.17016/IFDP.2021.1331r1
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