Remote Work and Job Applicant Diversity: Evidence from Technology Startups

Abstract

A significant element of managerial post-COVID job design regards remote work. In an era of renewed recognition of diversity, employers may wonder how diverse (gender and race) and experienced job applicants respond to remote job listings, especially for high-skilled technical and managerial positions. Prior work has shown that while remote work allows employee flexibility, it may limit career promotion prospects, so the net effect of designating a job as remote-eligible is not clear from an applicant interest standpoint, particularly when recruiting females and underrepresented minorities (URM). We analyze job applicant data from a leading startup job platform that spans long windows before and after the COVID-19 pandemic-induced shutdowns of March 2020. To address the empirical challenge that remote job designation may be codetermined with unobserved job and employer characteristics, we leverage a matching approach (and an alternative method which leverages the sudden shutdowns) to estimate how applicant characteristics differ for otherwise similar remote and onsite job postings. We find that offering remote work attracts more experienced and diverse (especially URM) job applicants, with larger effects in less diverse geographic areas. A discrete change in job posting to remote status (holding all else constant) is associated with an approximately 15% increase in applicants who are female, 33% increase in applicants with URM status, and 17% increase in applicant experience. Using the application data, we estimate an average estimated compensating wage differential for remote work that is about 7% of posted salaries in this labor market. This paper was accepted by Olav Sorenson, organizations. Funding: This work was supported by Mack Institute for Innovation Management at the University of Pennsylvania. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03391 .