Subtle discrimination

Pikulina, Elena S. and Ferreira, Daniel ORCID: 0000-0003-4590-8429 (2024) Subtle discrimination. Journal of Finance. ISSN 0022-1082 (In Press)

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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 promotions. 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 highstakes 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. Subtle discrimination also has unique empirical predictions in contexts such as equity analysis, lending, fund flows, banking careers, and entrepreneurial finance.

Item Type:	Article
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:	05 Nov 2024 18:39
URI:	http://eprints.lse.ac.uk/id/eprint/125960

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