Emily Nix, USC Marshall School of Business

"Dating and Breaking Up with the Boss: Benefits, Costs, and Spillovers"

Abstract

While romantic relationships between coworkers are common, intimate relationships between managers and subordinates have increasingly come under scrutiny. This article uses administrative data covering the universe of cohabiting couples in Finland to explore the career implications of dating and breaking up with a manager and the spillovers of these relationships on the broader workforce. Using an event study design, we find that starting a relationship with a manager leads to a 7% increase in earnings. When a manager and subordinate break up, the subordinate's earnings abruptly fall by 18%. Last, we examine the spillovers of these relationships on the broader workforce. We document a 6 percentage point decrease in retention of other workers from these relationships, with larger effects for smaller establishments and establishments where the subordinate had larger earnings gains. We conclude that these relationships impose negative externalities on colleagues, including but not limited to exit from the firm.

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Contact person: Daphné Skandalis