Diversity, Discrimination, and Performance

Abstract

Employee diversity may affect business performance both as a result of customer discrimination and as a result of how members of a group work with each other in teams. We test for both channels with data from more than 800 retail stores employing over 70,000 individuals, matched to Census data on the demographics of the community. We find little payoff to matching employee demographics to those of potential customers except when the customers do not speak English. Diversity of race or gender within the workplace does not predict sales or sales growth, although age diversity predicts low sales.

Keywords: dversity, performance, discrimination, race, gender, employee demographics, census, workplace, teams

JEL Classification: J11, J15, J14, J7, L81