Subtle Discrimination

Subtle Discrimination

Daniel Ferreira, Elena S. Pikulina

Series number :

Serial Number: 
903/2023

Date posted :

March 13 2023

Last revised :

March 13 2023
SSRN Share

Keywords

  • Gender gap • 
  • human capital • 
  • firm-specific skill • 
  • Promotion • 
  • performance evaluation • 
  • glass ceiling • 
  • leaking pipe • 
  • Gender Bias • 
  • Wage gap • 
  • wage differential

We propose a theory of subtle discrimination, defined as biased acts that cannot be objectively ascertained as discriminatory. We present a model in which candidates compete for a promotion. When choosing among equally qualified candidates, the principal subtly discriminates by breaking ties in favor of candidates from a particular group.

Subtle discrimination matters because it affects decisions to invest in human capital. The model predicts that discriminated agents perform better in low-stakes careers while favored agents perform better in high-stakes careers. In equilibrium, firms are polarized: high-productivity firms strive to be “progressive” and have diverse top management teams, while low-productivity firms prefer to be “conservative” and have little diversity at the top.

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Authors

Real name:
Elena S. Pikulina