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Subtle Discrimination

Author

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  • Pikulina, Elena S.
  • Ferreira, Daniel

Abstract

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.

Suggested Citation

  • Pikulina, Elena S. & Ferreira, Daniel, 2023. "Subtle Discrimination," CEPR Discussion Papers 18015, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18015
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    More about this item

    Keywords

    Discrimination;

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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