Subtle Discrimination

Elena S. Pikulina and Daniel Ferreira

No 18015, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Discrimination (search for similar items in EconPapers)
JEL-codes: J71 M51 (search for similar items in EconPapers)
Date: 2023-03
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