From Equal Access to Unequal Returns: Networks and Gender

Abstract

Does the effect of coworker networks on career trajectories differ between men and women? We answer this question in the context of German reunification, which provides a unique natural experiment. Before reunification, workplaces and network formation were fundamentally differently organized in socialist East Germany (GDR) and capitalist West Germany. In particular, we show that the state-governed allocation of workers to jobs due to central planning in the GDR resulted in more gender balance and equal access to high-quality networks for men and women. The massive economic transformation that happened after reunification, however, created diverging career paths for men and women, converging towards the less gender-equal West German distribution. Using novel data that links administrative records from the GDR and reunified Germany, we examine the role that workplace networks formed during the GDR regime play in the adjustment process. We find striking gender differences in the impact of networks on careers. While on average both genders benefit from having a high-quality network, the effects for men are particularly pronounced at the top of the wage distribution whereas networks benefit only women at the lower end of the wage distribution.