Don’t Demotivate, Discriminate

In this study, we present a new theory of discrimination at work. Our main contribution is twofold. First, we show that the anticipation of discrimination (or favoritism) by the employees is enough to create an equilibrium in which a manager will discriminate. This also holds for managers without any discriminatory preference and with full information on the productivity of the employees.

So our explanation does not rely on taste-based discrimination nor on statistical discrimination. Second, because the anticipation of discrimination is enough, our results show that the struggle against discrimination will be of all times and all places. It requires continuous attention.

The reason for our result is that managerial decisions regarding for instance allocation of tasks or promotions are signals to employees about their capabilities. We find that if employees anticipate that employees of type A (e.g. males) are favored over employees of type B (e.g. females), then these managerial decisions affect the self-confidence of employees of type A much stronger than those of type B. In a setting where self-confidence makes employees more willing to exert effort, the manager then is willing to avoid giving type A employees a bad signal, even when a type B employee would be better suited to that task.

Our study also suggests that empirical studies into discrimination in the workplace may miss something important. Many of those studies understandably focus mainly or entirely on the consequences of discrimination for the victims. However, our model shows that anticipations of discrimination may be self-fulfilling because managerial decisions affect the motivation of ‘favored’ employees more than the motivation of ‘disfavored’ employees. Therefore, to understand discrimination in the workplace better, it can be crucial to study the effects on the favored workers too.