Subtle Discrimination

76 Pages Posted: 23 Nov 2021 Last revised: 28 Dec 2023

See all articles by Elena Pikulina

Elena Pikulina

Finance Division, Sauder School of Business, University of British Columbia (UBC)

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Date Written: December 22, 2023

Abstract

We introduce the concept of subtle discrimination—biased acts that cannot be objectively ascertained as discriminatory—and study its implications in a model of competitive promotions. When choosing among similarly qualified candidates, a principal with a subtle bias towards a particular group may plausibly deny being biased. We show that subtle (as opposed to overt) discrimination has unique implications. Discriminated candidates perform better in low-stakes careers, while favored candidates perform better in high-stakes careers. In equilibrium, firms are polarized: high-productivity firms become “progressive” and have diverse management teams, while
low-productivity firms choose to be “conservative” and homogeneous at the top.

Keywords: Bias, gender gap, human capital, firm-specific skill, promotion, performance evaluation, glass ceiling, leaking pipe, gender bias, wage gap, wage differential

JEL Classification: M51,J71, J31

Suggested Citation

Pikulina, Elena and Ferreira, Daniel, Subtle Discrimination (December 22, 2023). European Corporate Governance Institute – Finance Working Paper No. 903/2023, Available at SSRN: https://ssrn.com/abstract=3966838 or http://dx.doi.org/10.2139/ssrn.3966838

Elena Pikulina (Contact Author)

Finance Division, Sauder School of Business, University of British Columbia (UBC) ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
6048223314 (Phone)

HOME PAGE: http://epikulina.com

Daniel Ferreira

London School of Economics - Department of Finance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)

HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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