The Heterogeneous Effects of Workforce Diversity on Productivity, Wages, and Profits

We estimate the impact of workforce diversity on productivity, wages, and productivity-wage gaps (i.e., profits) using detailed Belgian linked employer-employee panel data. Findings show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. While gender diversity is found to generate significant gains in high-tech/knowledge-intensive sectors, the opposite result is obtained in more traditional industries. Estimates neither vary substantially with firm size nor point to sizeable productivity-wage gaps except for age diversity.