Work Force Diversity

Workforce Diversity and Productivity: An Analysis of Employer-Employee Matched Data

by Linda Barrington Economics Program The Conference Board 845 Third Ave. New York, NY 10022-6679 and Kenneth Troske Department of Economics University of Missouri-Columbia 118 Prof. Bldg Columbia, MO 65211

July 2001

We would like to thank Robert McGuckin, David Neumark, and participants at the 2001 SOLE conference for helpful suggestions, and Lucia Foster for providing some of the data. The work on this paper was conducted while the authors were research associates at the U.S. Census Bureau. All opinions, findings, and conclusions expressed herein are those of the authors and do not in any way reflect the views of the Conference Board or the U.S. Census Bureau. The data used in this article were collected under the provisions of Title 13 U.S. Code and are only available at the Center for Economic Studies, U.S. Census Bureau. To obtain access to these data, contact the Center for Economic Studies, U.S. Census Bureau, RM 211/WPII, Washington, D.C. 20233.

Abstract Calls for workforce diversity abound; arguments in support of diversity at the workplace suggest that we are a better society when we work together. In a recent opinion poll, 81% of respondents said that it is somewhat or very important “to have employees of different races, cultures and backgrounds in the workplace or businesses.” However, the actual economic costs and benefits to workforce diversity are unclear. The goal of this paper is to empirically assess the relationship between workforce diversity and the economic performance of an establishment. We use the New Worker-Establishment Characteristics Database (NWECD), a nationwide employer-employee matched data set, to estimate the association between productivity and workforce diversity. These data allow us to overcome many of the limitations of past studies because the NWECD is an establishment-level data set. Our main finding is that diversity is either...