American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Diversity in the Workplace
American Economic Review
vol. 99,
no. 1, March 2009
(pp. 472–85)
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)Citation
Morgan, John, and Felix Várdy. 2009. "Diversity in the Workplace." American Economic Review, 99 (1): 472–85. DOI: 10.1257/aer.99.1.472Additional Materials
JEL Classification
- D83 Search; Learning; Information and Knowledge; Communication; Belief
- J15 Economics of Minorities and Races; Non-labor Discrimination
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J71 Labor Discrimination
- M12 Personnel Management; executive compensation
- M51 Personnel Economics: Firm Employment Decisions; Promotions