Wednesday, July 15, 2020

 Photo of Letian Zhang

For this post, I interviewed Letian Zhang. Professor Zhang is an Assistant Professor of Business Administration in the Organizational Behavior Unit at Harvard Business School. He is an Economic Sociologist. His research focuses on inequalities in the labor market, with particular attention to those that affect minorities and women.  

I asked him about his paper, “Shaking Things Up: Unintended Consequences of Firm Acquisitions on Inequality and Diversity.”  In this paper, Professor Zhang is interested in how mergers and acquisitions (M&A) affect women and minorities in their workplaces. He interviewed executives who experienced M&A’s first-hand. He also collected data, similar to the US census, but for companies that employ at least 100 people, from 1971-2015. 

When a company is acquired, lay-offs are inevitable. Previous work, like this paper, for example, has shown that, in general, the college-educated, highly skilled workers are at less risk of losing their jobs. It is the lower skilled, or back-office workers who are most often laid off. Professor Zhang measures diversity in the workplace with the proportion of minority managers or of female managers. He found that, compared to firms that did not experience an M&A, 5 years after an M&A, the proportion of minority managers increased by anywhere from about 2 to 5 percent, depending on the minority, and the proportion of female managers increased by about 2 percent. And, interestingly, the effect was stronger when the acquiring firm was more diverse.  

So, this is a nice example of a positive unintended consequence. And Professor Zhang has a very intuitive interpretation of it. While firms engage in M&A’s for financially motivated reasons, Professor Zhang did find in his interviews that executives do value, and want to increase, diversity. However, doing so in the absence of a large restructuring like an M&A is far too costly. So, they wait until an M&A, and take advantage of the opportunity to diversify. So, in this sense the diversity that results from M&A’s may not be fully unintended, but more like an unexpected benefit of M&A’s.

Professor Zhang was careful in his analysis, checking for other possible explanations for his result. For example, maybe the white men in managerial positions were voluntarily leaving after M&A’s. If so, this should happen more during good economic times. But this was not the case in his data. Or, maybe companies are looking to cut costs by eliminating the higher paid white men. If so, this should be happening in the companies in the most dire financial situations. This was also not the case in his data. 

Professor Zhang’s results show that M&A’s provide an opportunity for improved racial and gender equality.  But, keep in mind that they do generally result in layoffs of workers in lower level positions, potentially increasing socioeconomic inequality. No doubt it’s a complex issue --  we can learn from the different ways that different economists, and sociologists, approach and evaluate it.   
I asked Professor Zhang about his related current work. He has work in progress in which he is interested in the effect that the political affiliation of the CEO has on the level of racial inequality within a firm, and how this effect varies. So far he is finding that more liberal CEO’s  tend to value diversity more, and that CEO’s have more influence on the level of racial inequality when the business is changing more strategically.

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.

Monday, July 6, 2020

 Y. Claire Wang,  MD, ScD

For this post, I interviewed Claire Wang. Dr. Wang is the Vice President of Research, Evaluation & Policy at the New York Academy of Medicine. She is a physician, and she holds a doctoral degree in Health Policy and Decision Sciences. Her research specialties include the field of health technology assessment, which examines the economic costs and benefits of new technologies in the health sector; chronic disease prevention; and obesity. 

We talked about her paper, “COVID-19-Related School Closings and Risk of Weight Gain Among Children.” This paper is co-authored with Andrew Rundle, Yoosun Park, Julie Herbstman, and Eliza Kinsey. In this paper, Dr. Wang and her collaborators discuss a potential important unintended consequence of the school closures in the US during the Covid-19 pandemic. It’s too soon to have data on this, but previous work has addressed the factors at play here. 

First, because of the pandemic, many families are suffering financially and are grocery shopping less often, to avoid exposure to the virus. They are therefore buying more “shelf-stable” foods like pasta and ready-to-eat meals, which have lower nutritional value than foods like fresh fruits and vegetables, which are more expensive and don’t last as long. Second, results of previous studies have shown that childhood obesity increases during the summer, as opposed to during the school year. Over the summer, children become more sedentary, with increased screen time and no regular PE classes (not to mention screen time often means snack time, which often means junk food). 

Both of these factors mean that childhood obesity is likely to increase during Covid-19. And, both of these factors are more likely to matter for children in lower income families. These families are more dependent on the affordability of the shelf-stable foods. They also more often rely on school lunches (and perhaps breakfasts) for a good portion of their daily nutrition. Another risk factor is living in a city, particularly in a small apartment, without access to spaces for physical activity, especially ones large enough for social distancing. In some cities, these spaces do exist, but access has been restricted due to Covid-19.

I asked Dr. Wang about interventions that might reduce the risk of childhood obesity due to Covid-19. She told me that, from the outset, even though they were closed, many school districts made it a priority to keep offering meals (it’s something they do over the summer regularly). They provided grab-and-go options or delivery by school bus. She has other ideas that could help as well. The government could provide a specific subsidy to families, like food stamps, but just for fruits and vegetables. In terms of physical activity, schools need to be thoughtful about how to teach PE online. As a teacher myself, trying to be innovative about teaching online, I’m guessing that there are some thoughtful PE teachers out there with innovative ideas about this! 

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.