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Diversity in the Workplace

Author

Listed:
  • John Morgan
  • Felix Várdy

Abstract

We study minority representation in the workplace when employers engage in optimal sequential search and minorities convey noisier signals of ability than mainstream job candidates. The greater signal noise makes it harder for minorities to change employers' prior beliefs. When employers are selective, this leads to minority underrepresentation in the workplace. Diversity improves when the cost of interviewing, the average skill level of candidates, or the opportunity cost of not hiring increases. Reducing the cost of firing also increases minority representation. When employers are sufficiently unselective, the rigidity of employers' beliefs leads to overrepresentation of minorities. (JEL D83, J15, J24, J71, M12, M51)

Suggested Citation

  • John Morgan & Felix Várdy, 2009. "Diversity in the Workplace," American Economic Review, American Economic Association, vol. 99(1), pages 472-485, March.
    • Handle: RePEc:aea:aecrev:v:99:y:2009:i:1:p:472-85
    Note: DOI: 10.1257/aer.99.1.472
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    Citations

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    Cited by:

    1. Deepak Hegde & Justin Tumlinson, 2014. "Does Social Proximity Enhance Business Partnerships? Theory and Evidence from Ethnicity's Role in U.S. Venture Capital," Management Science, INFORMS, vol. 60(9), pages 2355-2380, September.
    2. Hoogendoorn, Sander M. & van Praag, Mirjam C., 2012. "Ethnic Diversity and Team Performance: A Field Experiment," IZA Discussion Papers 6731, Institute of Labor Economics (IZA).
    3. Darwin Joseph R. & Palanisamy Chinnathambi Selvaraj, 2015. "The Effects of Work Force Diversity on Employee Performance in Singapore Organisations," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 6(2), pages 17-29, March.
    4. Luca Flabbi & Mario Macis & Andrea Moro & Fabiano Schivardi, 2019. "Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance," The Economic Journal, Royal Economic Society, vol. 129(622), pages 2390-2423.
    5. Bernhard Eckwert & Burkhard Drees & Felix Vardy, 2011. "Cheap Money and Risk Taking: Opacity versus Underlying Risk," EcoMod2011 2782, EcoMod.
    6. Conde-Ruiz, J. Ignacio & Ganuza, Juan José & Profeta, Paola, 2022. "Statistical discrimination and committees," European Economic Review, Elsevier, vol. 141(C).
    7. Steinar Holden & Åsa Rosén, 2014. "Discrimination And Employment Protection," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1676-1699, December.
    8. Lepage, Louis Pierre, 2021. "Endogenous learning, persistent employer biases, and discrimination," CLEF Working Paper Series 34, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    9. Esther Hauk and Hannes Mueller, 2010. "Cultural Leaders and the Clash of Civilizations," Working Papers 481, Barcelona School of Economics.
    10. Esther Hauk & Hannes Mueller, 2015. "Cultural Leaders and the Clash of Civilizations," Journal of Conflict Resolution, Peace Science Society (International), vol. 59(3), pages 367-400, April.
    11. Neilson, William & Ying, Shanshan, 2016. "From taste-based to statistical discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 129(C), pages 116-128.
    12. Feng Li & Venky Nagar, 2013. "Diversity and Performance," Management Science, INFORMS, vol. 59(3), pages 529-544, September.
    13. Lepage, Louis Pierre, 2020. "Endogenous learning and the persistence of employer biases in the labor market," CLEF Working Paper Series 24, Canadian Labour Economics Forum (CLEF), University of Waterloo.

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • 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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