Institute for Research on Labor and Employment

Using data from a large U.S. retail firm, we examine how differences in race, age, and gender between a manager and a subordinate affect the subordinate’s rate of quits, dismissals, and promotions. We find that these demographic differences can have statistically significant and sometimes large effects on employment outcomes. This is especially true of differences in race and ethnicity, which consistently produce significant effects and which produce the largest effects. In general, demographic differences tend to produce adverse effects on employment outcomes (i.e., higher quit and dismissal rates, and lower promotion rates). But in three striking cases, where traditionally lower-status managers are supervising traditionally higher-status employees, differences produce favorable effects for employees.