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"Potential" and the Gender Promotion Gap

Author

Listed:
  • Alan Benson
  • Danielle Li
  • Kelly Shue

Abstract

We show that subjective assessments of employee "potential" contribute to gender gaps in promotion and pay. Using data on 29,809 management-track employees from a large retail chain, we find that women receive substantially lower potential ratings despite receiving higher performance ratings. Differences in potential ratings account for approximately half of the gender promotion gap. Women's lower potential ratings do not reflect accurate forecasts of future performance: Women subsequently outperform male colleagues, both on average and on the margin of promotion. We highlight two mechanisms driving the gender potential gap: strategic retention and stereotyping.

Suggested Citation

  • Alan Benson & Danielle Li & Kelly Shue, 2026. ""Potential" and the Gender Promotion Gap," American Economic Review, American Economic Association, vol. 116(2), pages 375-417, February.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:2:p:375-417
    DOI: 10.1257/aer.20220831
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    More about this item

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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