Subtle discrimination

Pikulina, Elena S. and Ferreira, Daniel ORCID: 0000-0003-4590-8429 (2025) Subtle discrimination. Journal of Finance. ISSN 0022-1082

Text (The Journal of Finance - 2025 - PIKULINA - Subtle Discrimination) - Published Version Available under License Creative Commons Attribution. Download (787kB)

• Scopus publication

Abstract

We introduce the concept of subtle discrimination—biased acts that cannot be objectively ascertained as discriminatory. When candidates compete for promotions by investing in skills, firms' subtle biases induce discriminated candidates to overinvest when promotions are low-stakes (to distinguish themselves from favored candidates) but underinvest in high-stakes settings (anticipating low promotion probabilities). This asymmetry implies that subtle discrimination raises profits in low-productivity firms but lowers them in high-productivity firms. Although subtle biases are small, they generate large gaps in skills and promotion outcomes. We derive further predictions in contexts such as equity analysis, lending, fund flows, banking careers, and entrepreneurial finance.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Finance
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification:	M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M51 - Firm Employment Decisions; Promotions (hiring, firing, turnover, part-time, temporary workers, seniority issues) J - Labor and Demographic Economics > J7 - Labor Discrimination > J71 - Discrimination J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
Date Deposited:	05 Nov 2024 18:36
Last Modified:	01 Nov 2025 04:09
URI:	http://eprints.lse.ac.uk/id/eprint/125960

Actions (login required)

View Item