Review of Research on Workforce Diversity in Public Sector

Review of Public Personnel Administration
30(1) 44 –69
© 2010 SAGE Publications
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DOI: 10.1177/0734371X09351823
http://roppa.sagepub.com
Workforce Diversity in the
New Millennium: Prospects
for Research
David W. Pitts1 and Lois Recascino Wise2
Abstract
Public organizations in the new millennium are tasked with a
myriad of human resource
management challenges that stem from workforce diversity, but
the field of public
administration has not produced a body of research that
adequately assists them with
these struggles. In 2000, Wise and Tschirhart called for “greater
contribution from
public administration scholars to the body of research focusing
on how human diversity
can best be managed to produce positive results.” They found
that existing research
contributed little usable knowledge for diversity management
policies and programs.

The authors examine whether their call for more rigorous and
more practice-oriented
research has been heeded by identifying articles on workforce
diversity published
in a core set of public administration journals since 2000. A
broad overview of the
literature on diversity is provided, followed by a more focused
discussion of empirical
research on employment diversity, diversity management, and
organizational outputs
and outcomes. It is found that although diversity issues remain
salient to public
administration scholarship, usable knowledge is in short supply.
A substantial share of
this research can be categorized as focusing on representative
bureaucracy issues. Few
empirical studies test diversity effects or hypotheses. Some
empirical work explains
factors beyond the control of human resource policies or
practicing managers, which
makes findings less useful to practitioners. The research suffers
from inadequate data,
little innovation in methodology, and insufficient attention to
empirical connections
between diversity and organizational results.
Keywords
diversity, representation, representative bureaucracy
1American University, Washington, DC, USA
2Indiana University, Bloomington, IN, USA
Corresponding Author:
David W. Pitts, Department of Public Administration and
Policy, American University, 4400 Massachusetts

Avenue NW, Washington, DC 20009, USA
Email: [email protected]
Pitts and Wise 45
The purpose of this article is to examine the landscape of
research on workforce
diversity in public-sector organizations. Workforce diversity
has become one of the
most salient management issues in organizations from all
sectors. When the Review
of Public Personnel Administration (ROPPA) was first
published in 1980, White males
accounted for 86% of all Senior Executive Service (SES)
employees in the U.S. fed-
eral government. By 2008, that number had decreased to 65%
(Office of Personnel
Management, 2008). In addition to more racial/ethnic and
gender diversity, globaliza-
tion has led to increases in cultural and linguistic diversity as
well. About 18% of all
households in the United States use a language other than
English, and about 13% of
U.S. residents were born in a different country (Rubaii Barrett
& Wise, 2007b). The
legal environment for diversity has been altered dramatically by
landmark court deci-
sions such as Bakke, Adarand, and the Gratz and Grutter cases,
as well as legislation
such as the Americans with Disabilities Act of 1990 and the
Civil Rights Act of 1991.
Since 1980, 12 states have passed legislation banning
employment discrimination on
the basis of sexual orientation (Human Rights Campaign, 2007).

Given these substan-
tial shifts in the environment of public organizations, the 30th
anniversary of ROPPA
is an excellent juncture at which to assess the state of research
on diversity and its util-
ity to public sector practitioners.
These changes in workforce diversity have required
organizations to change how
they think about human resources management. Their approach
to diversity has his-
torically focused on compliance with the laws and regulations
governing recruitment,
selection, and separation (for a review, see Riccucci, 2002).
However, worldwide gov-
ernment reforms during the 1990s and 2000s elevated the role of
performance and
strategy in managing public organizations (Kettl, 2000). A
focus on strategy and
performance requires organizations to tie management processes
to larger goals
and objectives, which has led to many organizations to consider
how workforce
diversity can be used to accomplish their missions. Indeed,
organizations often high-
light that employee diversity is a “strength,” which implies that
diversity can be used
as a lever to improve performance. This idea has developed over
time as the “business
case” for diversity (for a review, see Kochan et al., 2003).
Although arguments such as the business case for diversity are
intuitively appeal-
ing and politically popular, there is little evidence that
organizational diversity can be
used to boost performance. Whether employee diversity

improves organizational per-
formance is an empirical question that has not been adequately
tested in the public-
sector context. In 2000, Wise and Tschirhart reviewed the
evidence on connections
between employee diversity and organizational performance,
finding very little research
in this area that focused on public organizations. Their article
concluded with a call
for public administration scholars to engage in more empirical
research on workforce
diversity.
Our primary purpose in this article is to examine the extent to
which research in
public administration has responded to Wise and Tschirhart’s
(2000) push for greater
emphasis on diversity scholarship. Our analysis proceeds in two
parts. We begin with
an overview of the research on workforce diversity that was
published in a core set of
46 Review of Public Personnel Administration 30(1)
public administration journals since 2000. This part of our
analysis is purposefully
broad and meant to include a general cross-section of
approaches to diversity research.
For example, we include research focusing on particular
dimensions of diversity, such
as race, ethnicity, or gender; articles focusing on a particular
group within a dimension,
such as African Americans or women; research on diversity
management programs and

policies; and analyses and commentary on legal issues related to
diversity. Some of the
articles are descriptive, whereas others are more analytical. We
categorize each article
by the dimension of diversity that is examined, the journal in
which the article appeared,
the methodology used by the authors, and the year of
publication.
The second part of our examination is a more targeted analysis
of the articles that
explore the empirical relationship between workforce diversity
and organizational out-
comes. For each article, we categorize the dimensions of
diversity that are examined,
the organizational context, and the authors’ empirical strategy
for measuring diversity.
We argue that the second part of our analysis is particularly
important, given the evolu-
tion of the business case for diversity and government reforms
related to performance.
In the next section, we provide a brief overview of how research
on workforce
diversity has evolved over time. We outline the data and method
that we used to iden-
tify workforce diversity research, moving to a discussion based
on our initial overview
of research published since 2000. We then more closely
examine the empirical research
on diversity, diversity management, and outcomes.
The Evolution of Research on Workforce Diversity
There is general consensus that the roots of public
administration research on work-
force diversity are in representative bureaucracy. Representative

bureaucracy
research explores the demographic profile of government
employees and how it
compares to characteristics of citizens and service recipients.
The earliest research
in this area focused on social class (Kingsley, 1944), but most
of the research since
that time has focused on women and people of color (for a
review, see Dolan &
Rosenbloom, 2003). Research has typically found that women
and people of color
are underrepresented in government organizations, with steady
improvements over
time despite persistent shortfalls at the highest ranks (Kellough,
1990; Lewis, 1992;
Riccucci & Saidel, 1997, 2001; Wise, 1990). Some have
expanded on this work to
find that shared social and cultural experiences lead to other
results, such as improved
services or advancement of policies that benefit women and
minorities (Hindera,
1993; Keiser, Wilkins, Meier, & Holland, 2002; Meier, 1993;
Selden, 1997; Wilkins
& Keiser, 2006). Other studies focus on employee outcomes in
lieu of citizen out-
comes and find that advancement and pay gaps tend to exist
between men and
women (Guy, 1994; Lewis, 1992; Wise, 1994) and between
Whites and people of
color (Naff, 2001; Naff & Kellough, 2003).
The framework of laws that protect employment equity has been
crucial in promot-
ing representation, and this is the focus of another vital stream
of diversity research in
public administration. The past 30 years have seen a series of

landmark cases that have
Pitts and Wise 47
worked to both expand and contract Affirmative Action (AA)
programs, notably
Regents v. Bakke, Adarand v. Pena, Grutz v. Bolliner, and
Grutter v. Bollinger. Analysis
and commentary on these cases have provided practitioners with
the appropriate tools
for understanding the rights and responsibilities associated with
public employment
(see, e.g., Bradbury, in press; Carcieri, 2004; Naff, 2004;
Naylor & Rosenbloom,
2004; Sisneros, 2004). Although many legal cases and the
research that results from
them focus on women and people of color, legal changes that
affect other dimensions
of diversity have been examined in this stream of research as
well, most notably as
they relate to age (Wilkins, 2006), disability status (Bradbury,
2007), and sexual ori-
entation (Colvin, 2000, 2007; Riccucci & Gossett, 1996).
Although research on representation and AA/Equal Employment
Opportunity
(EEO) has continued, some scholars have shifted their focus to
the impact of employee
diversity on work-related outcomes. Theory suggests that
employee diversity benefits
organizations by increasing the number of perspectives and
solutions to problems, but
that it can also make organizations more likely to experience
employee conflict, mis-

communication, and mistrust (Adler, 2003; Williams &
O’Reilly, 1998). Limited
empirical research has examined the extent to which these
process-oriented problems
outweigh the benefits accrued from greater diversity in
employee pers pectives, with
mixed results (for a review, see Williams & O’Reilly, 1998).
Knowledge is limited on
diversity effects in for-profit firms (Kochran et al., 2003), and
we know even less
about the relationship between diversity and results in public
agencies (Pitts, 2005;
Pitts & Jarry, 2007; Wise & Tschirhart, 2000). This is a
challenging area of research,
because the relationship between diversity and performance is
often nonlinear and
contingent on other factors, requiring strong data and often
complex modeling strategies
(Choi, in press; Pitts & Jarry, in press).
Much of the research on workforce diversity has instead chosen
to focus on the
diversity management programs that became popular in the
early 1990s. Manage-
ment researchers had begun to observe that AA made it possible
for a wider variety
of employees to gain entry into firms, but the organizational
cultures often remained
the same, which prevented organizations from realizing any
benefits from diversity
(Konrad, 2003). Firms responded by adopting values-based
diversity programs in an
attempt to modify organizational culture, but research found
that these initiatives were
often unsuccessful (Bezrukova & Jehn, 2001). Thomas (1990)
was one of the first to

make the argument that neither the AA/EEO nor the “valuing
diversity” paradigm was
effective, advocating for a third approach: managing for
diversity. This approach was
more pragmatic and permitted organizations to create strategic
policies and pro-
grams for managing diversity. By emphasizing the potential
bottom line benefits,
Thomas made diversity initiatives more palatable to majority
employees whose inter-
est was on the bottom line. Organizations that managed for
diversity would be more
likely to recruit and retain diverse and effective employees,
which would in turn lead
to performance benefits. Public-sector organizations were quick
to adopt this philoso-
phy because it was politically defensible in ways that AA/EEO
never was and fit in
with the performance-based reforms of the 1990s (Kellough &
Naff, 2004; Rangarajan
& Black, 2007; Riccucci, 2002).
By 1999, 90% of U.S. federal government agencies had
established a diversity
management program, though some did not deviate much from
earlier AA/EEO initia-
tives, and the actual impact on advancement and pay equity for
women and people of
color was limited (Kellough & Naff, 2004; Naff & Kellough,
2003). Research on
whether these programs are effective is limited. Evidence
suggests that diversity man-

agement programs can boost job satisfaction and perceptions of
performance among
people of color (Pitts, 2009). However, the causal path between
diversity management
and organizational performance is complex, with research
demands that are frequently
unmet by existing data (Choi, in press). Much of the existing
research on diversity
management tends to be prescriptive and based on anecdotal
data, limited case studies,
or theories from other fields of study (see, e.g., Arai, Wanca-
Thibault, & Shockley-
Zalabak, 2001; Pitts, 2007; Von Bergen, Soper, & Foster, 2002).
Data and Method
The purpose of our analysis is to provide an overview of public
administration research
on workforce diversity published since Wise and Tschirhart’s
(2000) call for greater
attention to public-sector diversity issues. We examined all
articles published in a core
set of 12 public administration journals since 2000 (Table 1).
To draw a sample of
research that was comprised of units that could be compared
with one another and
across years, we did not consider books, book chapters, or book
reviews. We aimed to
include a broad representation of journals based in the United
States that publish
research on public-sector workforce issues, drawing heavily
from journals used in
similar earlier studies (Brewer, Douglas, Facer, & O’Toole,
1999). This included some
journals focused almost exclusively on workforce issues (e.g.,
Public Personnel Man-
agement and Review of Public Personnel Administration); some

focused on public
management more broadly (e.g., Public Performance and
Management Review or
International Public Management Journal); and some with a
primary focus on public
policy but occasional interest in management (e.g., Journal of
Policy Analysis and
Management). Interestingly, the Wise and Tschirhart (2000)
1961-1998 sample that
was based on hypothesis-testing journal articles focusing on the
relationship between
heterogeneity and performance did not capture any of these
journals.
We used three criteria in selecting articles for inclusion in our
analysis. As a starting
point, the research had to focus on workforce diversity as a
central theme. Diversity is
a tough concept to define. Perhaps the most restrictive
definition is held by organi-
zational behavior scholars, who consider diversity to be a
concept of variation or
heterogeneity. Greater heterogeneity reflects greater variation
among parts of a whole,
meaning that the highest workforce heterogeneity is achieved
when employees are split
evenly among all categories and groups. This approach
measures heterogeneity as it
exists on particular dimensions, which in the context of the
workforce would include
race, ethnicity, gender, and others. The heterogeneity construct
is agnostic to historical
representation patterns and discrimination—an organization that
is 95% African
American and 5% White is less heterogeneous and diverse than
one that is 50% White

and 50% Asian American. Heterogeneity is typically measured
independently for each
Pitts and Wise 49
dimension using an index that reflects dispersion across all
groups, such as a Blau or
Herfindahl Index. Quantitative variables that reflect the
aggregate percentage of
employees who are non-White or from a particular minority
group are not measures of
heterogeneity—they are simply indicators of the share of the
organization or work-
force held by a particular group.
Research on workforce heterogeneity is an important component
of diversity
research, but unlike the Wise and Tschirhart review we do not
limit our analysis to
those studies here. We also included articles that consider the
term diversity more
Table 1. Journal and Year of Publication
Journal 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total
Percentage
Review of 3 0 1 2 4 2 5 6 5 28 31.5
Public
Personnel
Administration
Public 2 0 1 2 4 3 5 0 1 18 20.2
Administration

Review
Public Personnel 3 1 1 4 1 0 0 2 1 13 14.6
Management
International 0 1 2 2 1 0 0 5 0 11 12.4
Journal of Public
Administration
Journal of Public 2 0 0 1 1 3 1 2 1 11 12.4
Administration
Research &
Theory
Administration & 0 1 0 0 1 0 0 2 0 4 4.5
Society
American Review 0 0 0 0 0 0 0 1 0 1 2.3
of Public
Administration
International Public 0 0 0 1 0 0 0 0 0 1 1.1
Management
Journal
Public Administration 0 0 0 0 0 1 0 0 0 1 1.1
Quarterly
Public Organization 0 0 0 0 0 0 0 1 0 1 —
Review
Administrative 0 0 0 0 0 0 0 0 0 0 —
Theory & Praxis
Journal of Policy 0 0 0 0 0 0 0 0 0 0 —
Analysis &

Management
Public Performance 0 0 0 0 0 0 0 0 0 0 —
& Management
Review
Total 10 3 5 12 12 9 11 19 8 89
loosely to apply to a particular minority group (e.g., African
Americans, women,
persons with disabilities) by itself and not in relation to other
minority or majority
group members. Studies that hone in on the issues related to one
group can benefit the
larger research agenda on diversity, though differently than
research on workgroup or
organizational heterogeneity. For this issue, we were most
concerned with whether
workforce diversity—however measured—was a central
component of the piece, not
just a control variable in analyses that primarily explored other
topics. If the article
did not discuss workforce diversity or one of its dimensions in
the title or abstract, we
assumed the contribution would be limited enough to warrant
exclusion. Similarly, we
did not consider articles that focused only on diversity among
clients or the target
population, although important they are beyond our scope. A
number of articles
considered how diversity among service recipients affected
policy outcomes, but

these were included in our analysis only if workforce diversity
was also a primary
component of the article. Because workforce diversity is an
inherent component of
representative bureaucracy research and thus important for
public administration, we
included work in that area in our sample. Thus, our sample
differs in important ways
from the one drawn by Wise and Tschirhart (2000) and should
have greater potential for
capturing diversity-related scholarship focusing on the public
sector.
Our search resulted in a sample of 89 research articles that
appeared from 2000 to
2008. We evaluated each article using several criteria. We
determined whether an
article focused on one or more specific dimensions of diversity:
(a) race or ethnicity,
(b) sex or gender, (c) disability status, (d) social class, (e) age,
(f) education or func-
tion, (g) sexual orientation, (h) religion, and (i)
nationality/language. This assists us
in evaluating whether workforce diversity research is focused
primarily on dimen-
sions of diversity that have historically been considered
relevant (e.g., race, ethnicity,
sex, and gender) or whether it is moving into other areas in
response to new workforce
demands (e.g., sexual orientation, age, nationality/language).
This is a particularly
relevant question for diversity researchers, given that Thomas’
(1990) early defini-
tion of the diversity management concept was that it be
multidimensional and inclusive
of all differences.

Second, we evaluated the methodology of each article and
determined whether it
used (a) quantitative methods only, (b) qualitative methods
only, (c) mixed methods,
(d) used empirical methods to analyze legal issues, or (e) was
not empirical. Third, we
identified whether each article aimed to understand diversity or
diversity management
empirically. This could take one of two forms. On one hand, the
study could use diver-
sity or diversity management as a key independent variable,
with the corresponding
dependent variable being an organization-level result or
outcome. In principle, we
would include individual, group, and organizational outcomes.
A study could also use
diversity or diversity management as a dependent variable, with
a series of organiza-
tional and/or environmental factors as predictors. The key issue
is whether research
aims to understand diversity or diversity management as it is
linked empirically to
other factors, an approach that we argue is the most likely to
result in gains for both
theory and practice—regardless of whether diversity is on the
left or right side of the
Pitts and Wise 51
equation. The articles that meet these criteria are then extracted
for more comprehen-
sive analysis in the second part of our study.

Trends in Workforce Diversity Research
In contrast to Wise and Tschirhart’s findings, we did not find a
clear trajectory in the
number of articles published over time. The number ranged
from only 3 in 2001 to 19
in 2007, with dips and increases in between and only 8 pieces in
2008. We found a
stronger pattern in the venues that published diversity research
(Table 1). Almost one-
third of the articles appeared in ROPPA, a total of 28 articles
across the 9 years of
research. Four other journals were frequent sources of diversity
research: Public
Administration Review (18 articles), Public Personnel
Management (13 articles), and
International Journal of Public Administration and Journal of
Public Administration
Research and Theory, with 11 articles each. Although broad
dissemination of diversity
scholarship across the major journals of the field would be
preferable in some respects,
it is also valuable for specific journals to develop ongoing
streams of research on
diversity issues. That appears to be the case with both ROPPA
and Public Personnel
Management—two key sources of scholarship on public-sector
workforce topics.
Attention to specific dimensions of diversity varied widely,
with a predictable
emphasis on women and people of color (Table 2). From 2000
to 2008, we identified
44 articles that addressed sex and gender issues in the
workforce, with wide ranging
foci that included employment trends (e.g., Kim, 2003; Llorens,
Wenger, & Kellough,

2008; Pynes, 2000), active representation by gender (e.g.,
Wilkins & Keiser, 2006;
Wilkins, 2007), and differences between men and women in the
workplace (e.g.,
DeHart-Davis, Marlowe, & Pandey, 2006; Guy & Newman,
2004; Stackman, Connor,
& Becker, 2005). We found 33 articles that addressed issues of
race and ethnicity. The
bulk of this research focused on workforce trends (e.g., Charles,
2003; McCabe &
Stream, 2000), active representation (e.g., Brudney, Herbert, &
Wright, 2000;
Riccucci & Meyers, 2004; Sowa & Selden, 2003), and
affirmative action issues
(e.g., Gest & Maranto, 2000; Naylor & Rosenbloom, 2004).
Consistent with Wise and
Tschirhart (2000), we find that studies in our sample are
primarily focused on sex/
gender and race/ethnicity.
Our analysis identified only nine articles that addressed age in
the workplace,
despite growing concerns in the 1990s about retirements and the
graying of the work-
force (West & Berman, 1996). Some of this research addressed
links between age and
employee outcomes and behaviors, such as job satisfaction
(Jung, Moon, & Hahm,
2007), turnover intention (Moynihan & Landuyt, 2008), and
response to online
recruitment (Rubaii-Barrett & Wise, 2007a). Other articles
focused more on develop-
ments in antidiscrimination laws protecting older workers (e.g.,
Riccucci, 2003;
Wilkins, 2006). Six articles from 2000 to 2008 addressed
disability issues, including

analysis of court decisions limiting the Americans with
Disabilities Act (Riccucci,
2003) and workplace issues for managing employees with
disabilities (e.g., Balser,
2007; Bradbury, 2007). An additional five articles considered
issues of sexual
orientation, primarily as it is included in antidiscrimination
policies (e.g., Colvin,
2000, 2007; Colvin & Riccucci, 2002).
Only four articles addressed religion in the workplace and only
two of these con-
sidered the managerial challenges of religious diversity (Ball &
Haque, 2003;
Garcia-Zamor, 2003). We identified only one article each that
addressed education/
functional diversity, social class diversity, and diversity of
nationality or language.
More than half of the articles in our study (55.1%, N = 49) used
quantitative,
empirical research methods to test their questions (Table 3).
Roughly 11% (N = 10)
of the articles used mixed methods, whereas qualitative methods
were used in only
3 articles (3.4%). We identified 15 articles (16.9%) that used
empirical methods to
examine legal issues, typically an analysis of recent court
decisions (e.g., Naylor &
Rosenbloom, 2004; Riccucci, 2003), legislation (e.g., Zeigler,
2006), or state-level

adoption of diversity-focused discrimination policies (e.g.,
Colvin, 2007). A total of
12 of the articles (13.5%) explored diversity without using
empirical methods. Some
of these focused on developing conceptual or theoretical
frameworks for diversity
(e.g., Foldy, 2004; Pitts, 2006; Selden & Selden, 2001), whereas
some used research
from other fields to develop best practices for diversity
management implementation
(e.g., Arai et al., 2001; Pitts, 2007).
Finally, we found that articles were most likely to focus on the
federal or state
government context (Table 4). Roughly, 42% (N = 33)
considered diversity in the
context of federal agencies, and an additional 30.8% (N = 49)
focused on state gov-
ernment agencies. Only 14.1% (N = 11) addressed diversity
issues in local government
organizations, and 11.5% (N = 9) considered diversity issues in
special districts or
public schools. The context for the analysis is dependent on a
number of factors,
chief among them being data availability. Federal-level data are
widely available,
making those agencies a prime context for research on diversity.
In our sample, only
one article explicitly addressed nonprofit organizations, but this
is not surprising,
Table 2. Dimension of Diversity by Year of Publication
Dimension 2000 2001 2002 2003 2004 2005 2006 2007 2008
Total Percentage

Sex/gender 7 1 2 5 8 5 6 5 5 44 49.4
Race/ethnicity 6 0 0 5 7 4 1 7 3 33 37.1
Age 1 0 0 2 1 1 1 2 1 9 10.1
Disability 0 0 0 1 1 0 0 4 0 6 6.7
Sexual 1 0 2 0 1 0 0 1 0 5 5.6
orientation
Religion 0 0 0 2 1 1 0 0 0 4 4.5
Social class 0 0 0 0 0 0 0 1 0 1 1.1
Education/ 1 0 0 0 0 0 0 0 0 1 1.1
function
Nationality/ 0 0 0 0 0 0 0 1 0 1 1.1
language
Pitts and Wise 53
given that our sample of journals did not include some of the
primary venues for
nonprofit research.
Trends in Empirical Research on Diversity and Outcomes
Of the 89 articles that we identified, only 24 examined diversity
empirically at the
organizational level. For ease of discussion, we split them into
two groups: those that
predict diversity as a dependent variable and those that use
diversity as an independent
variable to explain one or more organizational outcomes. We
proceed with our discus-
sion in four sections: (a) the dimensions of diversity covered in
these studies, (b) analysis
of research using diversity as a dependent variable, (c) analysis

of research using
diversity as an independent variable explaining organizational
outcomes, and (d) data
and context issues across studies.
Dimensions of Diversity
The dimensions of diversity explored in this cluster of studies
were limited. None of
the studies in our sample examined interactive effects of
different diversity dimen-
sions, but rather appear to make an implicit assumption that all
diversity dimensions
are of equal importance, regardless of context. The
overwhelming majority focused on
race/ethnicity (16 articles) and sex/gender (14 articles). One
article each addressed
age, disability status, and job function. We find no evidence
that diversity research is
moving away from race/ethnicity and gender/sex but there are
some negative conse-
quences to this attachment. Findings from one dimension of
diversity do not necessarily
apply to another dimension of diversity (Wise & Tschirhart,
2000), which means that
evidence about racial/ethnic and sex/gender diversity does not
improve our under-
standing of other dimensions. For example, there is nothing
about how government
agencies and work groups are affected by the presence of non-
native speakers of
Table 3. Methodological Approach by Year of Publication
Methodology 2000 2001 2002 2003 2004 2005 2006 2007 2008
Total Percentage

Quantitative 6 1 2 6 4 7 5 12 6 49 55.1
only
Qualitative 0 0 0 1 0 1 0 1 0 3 3.4
only
Both/mixed 2 0 1 2 3 1 0 1 0 10 11.2
methods
Empirical 1 0 0 1 4 0 3 4 2 15 16.9
approaches
to legal
issues
Nonempirical 1 2 2 2 1 0 3 1 0 12 13.5
Total 10 3 5 12 12 9 11 19 8 89
English. The business case for diversity might suggest that
language diversity leads to
broader cultural perspectives that benefit performance, but does
it cause communica-
tion breakdowns that make performance suffer? Some research
suggests that it would,
particularly in complex tasks that require explanation and
discussion (Hambrick et al.,
1998). Are diversity management programs that address
language issues effective? If
so, on what do they focus? If not, on what should they focus?
These same questions could be posed for other dimensions of
diversity, such as
language, sexual orientation, and religion. The issues here are

not simply symbolic.
The workforce is seeing increases in the percentage of
employees who speak a lan-
guage other than English at home (Rubaii-Barrett & Wise,
2007b); greater willingness
of employees to publicly identify themselves as lesbian or gay
(Griffith & Hebl, 2002);
and a larger variety of religious and spiritual practices among
employees (Hicks,
2002). If research is to inform the practice of human resources
management, it must
identify the consequences of those shifts and understand the
management initiatives
that are in place to affect them.
Diversity as a Dependent Variable
A total of 16 articles were concerned with diversity as a
dependent variable—an organi-
zational outcome or result—using varying levels of analytical
sophistication (Table 5).
In almost all of these cases, diversity was not measured as
heterogeneity, but rather as
the percentage of the workforce/organization that was
comprised of particular groups.
Two notable exceptions were Kim (2005) and Llorens et al.
(2008), both of which
used representation ratios that partially reflect heterogeneity.
Most of the research
used data at the organizational level, an approach that may be
useful in understanding
diversity for symbolic purposes, but less helpful in
understanding how it relates to
outcomes. The business case for diversity is based on benefits
that accrue from the
interaction of diverse employees, so it is important to discern
whether diversity exists

in different parts of the organization. For example, if an
organization employs equal
Table 4. Context of Research by Year of Publication
Context 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total
Percentage
Federal 3 0 2 5 6 3 4 6 4 33 42.3
government
State 4 1 1 3 4 2 2 5 2 24 30.8
government
Local 1 0 0 1 1 2 1 3 2 11 14.1
government
Public schools/ 0 0 1 1 0 2 1 4 0 9 11.5
special districts
Nonprofit 1 0 0 0 0 0 0 0 0 1 1.3
organizations
Total 9 1 4 10 11 9 8 18 8 78
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e

th
n
ic
it
y
56
Pitts and Wise 57
numbers of men and women—perfect diversity by gender—but
women make up 10%
of managers and 90% of administrative support staff, there
would be little reason to
expect performance gains. Toward this end, the most useful
studies that we identified
in our analysis disaggregated workforce diversity statistics by
policy area, job func-
tion, or level of responsibility (e.g., Naff & Crum, 2000; Naff &
Kellough, 2003;
Pynes, 2000).
Some of the research that examined diversity as an outcome
focused on explaining
the longitudinal trends in the employment of different groups,
primarily women and
people of color (e.g., Charles, 2003; Kim, 2005; McCabe &
Stream, 2000; Pynes,
2000). Such studies are certainly useful in understanding
workforce diversity trends
and social progress, but their utility is limited to conjecture
about why they found

representational differences between groups. Other studies took
the analysis a large
step further to test propositions about why different groups
achieved representation in
some organizations but not others. Some of the determinants
explored included issues
in the labor market and political environment (e.g., Goode &
Baldwin, 2005; Kim,
2003, 2004; Llorens et al., 2008; Naff & Crum, 2000); diversity
management pro-
grams and Affirmative Action policies (e.g., Kellough & Naff,
2004; Kogut & Short,
2007; Naff & Kellough, 2003); and how racial/ethnic identity
can affect the represen-
tation of women (e.g., Hsieh & Winslow, 2006). Data on
different organizational and
environmental factors were used to test which issues tended to
promote (and detract)
from workforce diversity, an approach that is arguably much
more useful to both
scholars and practicing managers. These articles help scholars
build on common
means of predicting representation and diversity, which will
promote a more compre-
hensive understanding of the issues at hand. On the practical
side, such studies assist
managers in understanding the levers they may use to recruit
more effectively from
groups that are believed to be underrepresented. If public
administration is an applied
field of study that aims to produce prescriptions for public
managers, it should go
beyond descriptive analyses of workforce trends to give public
managers something
concrete to act on.

Diversity as an Independent Variable
Perhaps the largest unresolved issue in workforce diversity
research is whether the
business case for diversity stands up to empirical scrutiny. An
answer to that question
can be formulated only through testing diversity as an
independent variable that affects
organizational outcomes, but only eight articles in our sample
that did so (Table 6).
These studies were more likely than others to focus on
workforce heterogeneity, either
through an index of dissimilarity (e.g., Pitts, 2005; Pitts &
Jarry, 2007) or representa-
tion ratio (e.g., Andrews, Boyne, Meier, O’Toole, & Walker,
2005; Pitts, 2007). The
usefulness of the outcome measures tested in these articles
varied. Three of the studies
tested how diversity affected perceptions of organizational
outcomes or results that
some may consider “performance” but are probably more
accurately antecedents of
performance. For example, Antonova (2002) examined how
gender affected employee
T
a
b
le
6
.
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59
perceptions of different characteristics of organizational
culture, and Ivancevich
and Gilbert (2000) considered links between diversity and
perceptions of resource
availability. Andrews et al. (2005) tested the relationship
between racial/ethnic repre-
sentation and citizen satisfaction with local government
services. Given recent
emphasis on treating citizens as clients or customers, subjective
measures such as the
one used in Andrews et al. (2005) have become increasingly
relevant as outcome
metrics.
The other studies in this area were drawn from the public
education policy setting,
and these five cases all used data from Texas public schools.
This is a policy context
with unambiguous outcome measures, the most common being
student test scores.
Test scores arguably do not reflect true student competency or
the quality of instruc-
tion, but they are nonetheless crucial to the assessment of
performance by elected
officials, particularly in Texas. Other results used in this area
included dropout rates
(Pitts, 2005; Pitts & Jarry, 2007) and college readiness (Meier,
O’Toole, & Goerdel,

2006). Overall, these studies can be taken as indirectly
supporting expectations based
on the anticipated linkage between diversity and performance.
These metrics are polit-
ically salient and easy to measure, but it is difficult to formulate
a strong causal story
about why they are likely to be influenced by employee
diversity. The measures are
true outcomes that are largely influenced by external factors
that may not reflect orga-
nizational diversity at all. Proper specification and the inclusion
of control variables
become vital to ensure that bias does not lead one to find
diversity effects that actually
reflect something else.
Data and Policy Context
The 24 empirical studies that we have identified here reflect the
lack of data avail-
able for use in public administration research on workforce
diversity. Many of these
articles use U.S. federal government data, either from the U.S.
Office of Personnel
Management’s (OPM, 2008) Federal Human Capital Survey or
Central Personnel
Data File (e.g., Hsieh & Winslow, 2006; McCabe & Stream,
2000; Naff & Crum,
2000;). These archival data are good options for diversity
research. They typically
include multiple years of data, allowing for longitudinal
research, and survey sam-
pling strategies are rigorous. They also span multiple policy
areas, making it easier to
generalize these results than those in a single policy context. On
the other hand, fed-
eral agencies are enormous organizations, and it is difficult to

be sure that diversity
measured at the organizational level actually filters down to
work groups. Studies that
disaggregate diversity figures by policy area or supervisory
status ameliorate this to
some extent, but there is no way to know the extent to which
dissimilar individuals are
interacting on the job.
Five of the articles use data from Texas public schools, a source
used in a number
of other public administration research areas. It is arguably
difficult to generalize these
findings to many other policy contexts, given that education
organizations are very
professionalized, highly decentralized, and draw on funding
sources different from
Pitts and Wise 61
many other government agencies (see, e.g., Pitts, 2005).
Perhaps more consequential
is the fact that these represent five of the eight articles testing
the link between diver-
sity and performance. It is problematic that we have so little
evidence accumulating in
public administration on the business case for diversity, but it is
even more of an issue
when five of the eight pieces come from the same data source.
A theory base cannot
develop from a single data set in one policy setting. Although
there are scholarly
advantages in multiple studies drawing from the same database,
a disadvantage in this

case is the age of the survey data on which the studies are
based, particularly given the
rapid changes in acceptance of diversity in recent decades (Wise
& Tschirhart, 2000).
The lack of data sources stems from several practical problems
that thus far have
eluded solution. A number of factors limit collection of
individual-level data to answer
specific research questions and unacceptably low survey
response rates often compro-
mise collected data. Public organizations in the United States
typically collect extensive
data on employee demographics facilitating straightforward
tests of some diversity
effects. But diversity effects cannot be generalized from one
dimension of diversity to
another (Wise & Tschirhart, 2000) and given the array of salient
diversity dimensions,
the possibilities for replication are weakened.
More confusion comes in figuring out how to measure
outcomes. Performance mea-
surement is a persistent problem in public administration that is
complicated by the
political environment and goal ambiguity that many public
agencies face (Boyne et al.,
2007). As diversity research in the for-profit arena identifies
contingencies, interac-
tions, and nonlinearities in relationships between diversity and
outcomes, a host of
other variables become necessary for empirical tests, and those
are typically hard to
come by without an original survey (Choi, in press; Pitts &
Jarry, in press). Bringing
diversity management into the equation most certainly requires

survey data, archival
research, and/or content analysis (Kellough & Naff, 2004).
These concerns are compounded by the problem of
organizational access. To collect
the necessary data, researchers must convince organizations to
“let them in,” a propo-
sition that is particularly shaky in an area such as diversity that
is fraught with such
important normative issues. Few organizations want to run the
risk of being exposed
as having a subpar diversity management program or
discriminatory organizational
culture.
There are reasons to be optimistic, however, given efforts by
diversity research-
ers to collect new data that can be used in research. For
example, Ed Kellough and
Katherine Naff conducted a comprehensive survey of federal
government agencies
on diversity management programs, producing data that
supplemented existing demo-
graphic information available through other means (Kellough &
Naff, 2004; Naff &
Kellough, 2003). Other studies reflect original data collection in
a variety of other
contexts, including nonprofit organizations (e.g., Pynes, 2000),
municipal govern-
ments (e.g., Alozie & Moore, 2007; Goode & Baldwin, 2005),
and agencies in other
countries (e.g., Antonova, 2002; Kim, 2003). Some research
took advantage of exist-
ing archival data produced by the U.S. Census in creative new
ways (e.g., Hsieh &
Winslow, 2006; Llorens et al., 2008).

As researchers collect more data, they should be mindful to
include qualitative
methods. All of the articles included in this analysis used
quantitative methods, which
limits our ability to understand the nuanced relationships that
are at work. Of course,
many issues in the diversity sphere are best discussed in terms
of numbers. For exam-
ple, to measure workforce heterogeneity, it is probably better to
start with the numbers
of employees in each racial/ethnic group than with a verbal
description of the mix.
The causal mechanisms underlying the relationships between
diversity, diversity
management, and organizational outcomes are contingent and
very complex (Foldy,
2004). Quantitative data are not likely to fully capture the
dynamics. Comprehensive
case studies using mixed methods have the potential both to
solve this problem and
to assist quantitative researchers in identifying the variables
that should be included
in large-N models.
Conclusion
Using a relatively broad definition of “diversity” we found
evidence that interest in
diversity scholarship has continued since 2000. Examination
indicates that publica-
tion of diversity-related studies tends to be limited to a subset
of public administration

journals, a couple of diversity dimensions, and a few
organizational frameworks. A
number of key journals in our field published no research on
diversity during the study
period that fell within our guidelines. About half of the studies
we found focused on
issues of sex or gender and more than a third focused on race
and ethnicity. Research
on other diversity dimensions such as disability, age, or sexual
orientation was rare,
consistent with Wise and Tschirhart’s earlier meta-analysis.
Workforce diversity research among scholars of public
administration is popu-
lated primarily with studies of representative bureaucracy, with
only a small portion
of current research providing practical, action-based findings
for public managers
and human resource practitioners. There is little research that
would allow public sec-
tors managers to step beyond best guesses for what does and
does not work for
managing diversity. The large body of work focusing on issues
related to equitable
employment outcomes is delivered with little information about
which approaches
have the best results for promoting equitable employment
practices and integrating
diverse others into the public workforce. With a few exceptions,
public sector scholars
are focusing on factors that managers cannot manipulate. Future
research might
address this shortcoming by comparing employment outcomes at
the organizational
level based on comparing the relative successes of different
approaches with manag-

ing workforce diversity such as training programs to reduce bias
or change attitudes,
workplace diversity committees, formulation of affirmative
action strategies and stra-
tegic plans related to diversity, or efforts to promote inclusion
through mentoring and
networking. These findings need to be replicated by other
scholars; a single study
reporting a finding for or against a particular management
strategy for enhancing rep-
resentativeness or employee diversity is not a sufficient basis
for action and may lead
to the implementation of programs that will ultimately fail in
many organizations.
Pitts and Wise 63
We did find some empirical research on diversity and
organization-level results that
has some potential for informing practice, but we argue this
research can only be
viewed as indirectly supporting the assumed positive
relationship between diversity
and outcomes. Performance is often measured with antecedents
and proxies that
may or may not translate into better performance or an
organization’s level of effi-
ciency or effectiveness. In these studies, we know little about
what was happening
inside the black box of organizational context. This highlights
two empirical ques-
tions that warrant further investigation: Can we confirm that
diversity leads to certain
favorable organizational outcomes? What are the contextual

characteristics and diver-
sity management strategies in place when favored outcomes
were or were not attained?
Our main conclusion echoes that of Wise and Tschirhart (2000)
nearly 10 years
ago: Diversity research has limited utility for public sector
managers. Human resource
managers should be cautious about the extent to which they rely
on research findings
in deciding how to address to diversity issues and which
programs or policies to
implement. The pool of research is too shallow to use the
results with confidence, and
existing research is not designed to answer the question “What
works?” Similarly,
studies investigating the linkage between workforce diversity
and organizational per-
formance for several reasons fall short of being able to offer
sound advice to human
resource managers about how their organizations might leverage
diversity for greater
efficiency or effectiveness.
One path scholars might pursue in the future to help inform
practitioners about
what works for managing diversity would be the area of cultural
competencies (Rice,
2007). Empirical studies on this topic are relatively limited but
squarely focused on
the health care sector, which can be seen as an advantage for
interpreting the reliability
of findings. These studies suggest some promising effects for
public service delivery
and citizen satisfaction in that culturally competent public
officials can provide ser-

vices within the context of different social systems that better
meet citizens’ needs and
preferences (Weech-Maldonado, 2002). Confirming this
assumption for health care
workers and applying this research to other sectors of
government would advance the
utility of diversity-related research.
We argue that public administration research can play a vital
role by producing
better information about the impacts of workforce diversity on
organizational out-
comes. Only through empirical research can the relationships
among diversity, diversity
management, and organizational outcomes become clear. More
data are necessary,
particularly from new policy contexts and types of
organizations, and performance
outcomes to advance our knowledge about the consequences of
workplace heterogene-
ity and diversity programs and policies. By understanding these
complex relationships,
research can provide more effective assistance to public-sector
HR managers who are
charged with the task of balancing demands for equity and
performance.
Declaration of Conflicting Interests
The authors declared no conflicts of interest with respect to the
authorship and/or publication of
this article.

Funding
The authors received no financial support for the research
and/or authorship of this article.
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Bios
David W. Pitts ([email protected]), PhD, is an assistant
professor in the School of Public
Affairs at American University, Washington, DC. His research
focuses on workforce diversity
and public-sector human resources management.
Lois Recascino Wise ([email protected]), PhD, is a professor in
the School of Public and
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at Indiana University, Bloomington, IN. Her research centers on
comparative administrative
reform and includes a special focus on the public sector and
managing for diversity.

De Economist (2011) 159:223–255
DOI 10.1007/s10645-011-9161-x
Diversity at the Workplace: Whom Does it Benefit?
Pekka Ilmakunnas · Seija Ilmakunnas
Published online: 24 April 2011
© Springer Science+Business Media, LLC. 2011
Abstract We examine whether firms and their employees benefit
from age and
educational diversity. At the plant level we explain productivity
with workforce char-
acteristics. Age diversity is positively and educational diversity
negatively related to
total factor productivity. These conclusions are robust to using
alternative estimators
(fixed effects, GMM, and Olley-Pakes approach). Individual
gains are evaluated by
estimating earnings equations with job match fixed effects. The
explanatory variables
include individual demographic variables, plant-level workforce
characteristics and
variables that describe the individuals’ relative position in the
age, education, and
gender structure of the plant. Plant-level diversity does not have
a significant effect on
individual wages. However, being different from others in terms
of age, i.e. relational
demography, is positively related to wage.

Keywords Aging · Productivity · Workforce diversity ·
Linked employer-employee data
JEL Classification D24 · J10 · J24 · J31
Earlier versions of this paper have been presented at CAED
conference in Budapest, EALE Conference
in Tallinn, Workshop on Ageing Workforces in Louvain-la-
Neuve, Annual Meeting of the Finnish
Economic Association in Turku, and in a seminar at the Labour
Institute for Economic Research.
We are grateful to the participants and two referees for
comments.
P. Ilmakunnas (B)
Aalto University School of Economics and HECER, PO Box
21240, 00076 Aalto, Helsinki, Finland
e-mail: [email protected]
S. Ilmakunnas
Labour Institute for Economic Research, Pitkänsillanranta 3A,
00530 Helsinki, Finland
e-mail: [email protected]
123
224 P. Ilmakunnas, S. Ilmakunnas
1 Introduction
Aging of the labor force poses challenges to economic policies.
One relevant issue
is labor productivity. Aging has a negative effect on overall
economic growth, if, on
average, older workers are less productive than their younger
counterparts. Former

empirical research has given at least some support to this worry.
The situation is acute
also at the firm level where the baby boomers in many cases are
likely to dominate
the age structure. Their retirement during a relatively short time
span may pose chal-
lenges to the human resource management. With many senior
experts leaving the firm
simultaneously, it may prove to be difficult to make all the
necessary recruitments in
a smooth and balanced way. Disturbances are to be expected if
the firm fails to renew
its personnel by anticipating early enough the numerous exits
among its workforce.
All in all, the ability to transfer tacit knowledge urges firms to
consider their age
structure more carefully than thus far. This brings us to the
research question of this
paper, i.e. what are the pros and cons of the age diversity in
economic terms. The
term diversity refers in our analysis to the distribution of
personal attributes among
the members of a work unit (establishment). Age diversity is
related to the broader
issue of managing diversity in the working life. Relevant other
dimensions of diversity
include e.g. gender and ethnic relations, but also tenure and
educational background.
These other dimensions can actually be closely related to age
diversity. For instance,
it has been argued that longer experience can compensate for
the potential negative
age effects on productivity. Accordingly, this paper analyzes
the economic effects of
firm-level diversity also in this wider perspective by

considering both age and skill
(educational) diversity. Since workforce diversity is often
regarded as a “social good”,
it is valuable to see whether it is in line or in contradiction with
private economic
gains.
Workforce diversity influences also the individual well-being of
the employees.
Firstly, employees may find it pleasurable to work in plants that
are comprised of
heterogeneous workforce (young and old, men and women,
employees with different
work experiences etc.). Secondly, in addition to direct utility
(or disutility) one would
expect the wage effects of diversity to be in line with the effect
on productivity. If, for
instance, age diversity is good for productivity at the firm or
plant level, this positive
effect is likely to be reflected as a positive effect on individual
wages, too. This in mind
we ask whether workforce diversity brings economic benefits
also to the employees
and whether there is symmetry between the economic effects at
the plant level and
at the individual level. In this case, we also extend the analysis
to dissimilarity, i.e.
diversity understood as the extent to which the individual is
different from others in
the establishment.
Analysis of diversity has a long tradition in human resource
management (HRM)
research, but only recently has it attracted attention in labor
economics. Compared to
the earlier studies we have a broader approach. Earlier analyses

have either considered
the effects of diversity at the employer level or at the level of
individuals. This paper
aims to look at the outcomes on both sides. Our analysis also
differs from earlier stud-
ies, especially those conducted in the field of HRM, in that it
utilizes a large linked
employer-employee data set. In contrast, many of the HRM
studies are of case-study
type or use special data sets that are not representative of all
firms or employees. Our
123
Diversity at the Workplace: Whom Does it Benefit? 225
findings suggest that age diversity may indeed be beneficial at
the plant level, but
educational diversity may have adverse effects. However, the
plant-level effects on
productivity do not show up as a statistically significant general
effect on all wages.
At the individual level, it is the individual’s dissimilarity from
others that plays a role.
We proceed as follows. In Sect. 2 we review earlier literature on
the connection
of diversity and performance, both from the economics and
human resource manage-
ment points of view. In Sect. 3 we describe the employer-
employee data set that we are
using. Section 4 presents the plant-level and individual-level
models to be estimated.
The results are presented in Sects. 5, 6, and 7 concludes the

paper.
2 Workforce Diversity and Productivity
In economics there are no unambiguous results on the direction
of diversity and pro-
ductivity. The effects of diversity can be modeled through
preferences, strategies, or
the production function (see Alesina and La Ferrara 2005).
Diversity may have neg-
ative consequences on productivity, if an employee’s utility and
work performance
depend negatively on the share of employees who are different
from him in terms of
ethnicity, age, gender etc. In this kind of situation, individuals
tend to select them-
selves into workplace with workers who are similar to them. On
the other hand, if
workers regard diversity as a social good, the impact is the
opposite. Strategic effects
can arise when it is more efficient to work with similar
colleagues especially under
imperfect information. Similarity facilitates easier formation of
coalitions and rep-
utation formation, for example.1 In the production function
approach a diversified
workforce performs better than a homogeneous one, if workers
of different skills or
other attributes are complementary. The positive
complementarity may also arise from
spillovers. It has indeed been a popular argument that younger
workers can learn from
the older ones, for instance. However, the O-ring production
function (Kremer 1993)
would predict negative diversity effects: there is sorting of
people of similar skills to

work together and therefore diversity does not bring benefits for
the firms. Even with
positive diversity effects, there may also be additional
communication costs, which
lead to a trade-off between the benefits and costs. Lazear (1999)
has emphasized that
the gains from diversity are greatest when the individuals have
separate, but comple-
mentary information sets and the information can be learned at
low cost.
In human resource management (HRM) research, diversity of
the labor input is
understood in a somewhat different way than what is typical in
empirical labor eco-
nomics. The diversity may cover more dimensions and the
emphasis is on team dynam-
ics and commitment to common values (see e.g. Williams and
O’Reilly 1998; Riordan
2000; Jackson et al. 2003; Horwitz and Horwitz 2007, and
DiTomaso et al. 2007, for
surveys). One argument suggests that the more similar an
individual is to his/her peers,
the more organizational commitment to work unit he/she has.
This relationship may
not be straightforward. Pelled et al. (1999) argue that age
diversity within a workplace
diminishes emotional conflict. This is based on the idea that age
similarity increases
1 A variant of behavioral effects is the influence of peer
pressure (e.g. Kandel and Lazear 1992; Mas and
Moretti 2009; Bandiera et al. 2010) when low and high
productivity workers work together.
123

career progress comparisons and rivalry leading to harmful
outcomes. On the other
hand, rivalry may actually lead to more effort and improved
productivity (e.g. Choi
2007). It is clear that this kind of arguments can be interpreted
as e.g. preference or
strategic effects.
The connections of diversity and productivity can be
empirically examined at the
aggregate (firm, plant, work unit etc.) level or at the individual
level. At the aggre-
gate level it is in most cases not possible to distinguish between
the possible channels
(preferences, strategies, and production function), since the
production function is a
‘black box’. At the individual level it is in principle easier to
examine various chan-
nels, but individual-level productivity measures are available
only in very special
cases. Most of the available research in labor economics has
therefore relied on large
linked employer-employee data sets and studied the connections
between the diver-
sity of workforce characteristics and productivity at the plant or
firm level. The HRM
research has had more emphasis at the individual level, but also
to some extent at the
team or firm level. In HRM studies the effects of work-group
composition have been
analyzed in the context of two approaches, relational

demography and group diver-
sity. Relational demography is defined as the extent to which a
particular member is
different (dissimilar) from other members within the same work
unit. Group diversity
in turn refers to the degree to which a work unit is
heterogeneous with respect to
demographic attributes. The firm-level labor economics
research belongs to the latter
category. A difference in the implications of the two approaches
is that group diver-
sity can have a homogenous impact on all the members of the
work-group, whereas
relational demographics affect by definition the individuals
differently, depending on
how different they are from the others.
The way in which diversity is measured depends on the level of
analysis and the con-
text (relational demography vs. group diversity). The HRM
studies have used standard
deviation, entropy measures and various dissimilarity measures
to gauge diversity (see
Harrison and Klein 2007; Riordan and Wayne 2008), whereas
most labor economics
studies have used standard deviation as the diversity measure.
However, linked data
sets can also be used for combining various employee
characteristics to multidimen-
sional diversity measures (Barrington and Troske 2001).
Harrison and Klein (2007)
use the diversity typology: separation, variety and disparity.
Separation refers to hori-
zontal diversity, for example age differences. Disparity implies
that for example age is
(e.g. socially or economically) valued so that more is better.

Variety in turn is used for
discrete attributes, like gender, but it can also be used for
example if the employees are
divided to age groups, e.g. “young”, “mid-aged” and “old”.
These different diversity
concepts may require different measures.2
The outcome variables in these empirical studies are also
varied. For the firm or
plant level, value added per employee, sales per employee, total
factor productivity, or
financial indicators have been used. In team-level studies
performance has been mea-
2 Another way in which the diversity attributes can be classified
is based on the distinction between task-
related and relations-oriented attributes (Jackson et al. 2003).
Task-related attributes are more directly related
to skills needed in the working life, like education, tenure, and
functional background, while relations-
oriented diversity includes attributes like age, gender, race, and
ethnicity. These latter types of characteris-
tics are likely to have a more indirect effect on work
performance since they have a bearing on interpersonal
relationships (e.g. trust and communication within the
workplace).
123
Diversity at the Workplace: Whom Does it Benefit? 227
sured by productivity or by using team-member ratings of team
effectiveness (Jackson
et al. 2003). At the individual level, the analysis has focused on

various individual-
level outcomes such as organizational commitment, turnover or
turnover intentions,
individual creativity and frequency of communication (see e.g.
Riordan 2000).
We briefly review results from earlier empirical studies,
concentrating on those
that use linked employer-employee data sets, similar to that
used in this study. The
work on diversity using this kind of data sets relates to a larger
literature on work
force characteristics and productivity (e.g. Hellerstein et al.
1999; Ilmakunnas and
Maliranta 2005). Using the links between employees and
employers, it is possible to
form measures of the age, tenure, and educational structure of
the workforce in each
plant and/or firm. This type of research with linked data sets
has mostly dealt with com-
parisons of productivity and wage profiles with the motivation
to test different theories
of wage formation. These studies have used slightly different
approaches, describing
the workforce structure with averages of age and other
characteristics or the shares
of employees in different age, tenure, or educational groups.
Some researchers have
extended this type of analysis by considering especially
workforce heterogeneity, but
in some other studies heterogeneity is used more as a control
variable.
With Danish data Grund and Westergård-Nielsen (2008) found
both mean age and
standard deviation of age to have an inverse U-shaped

relationship with firm perfor-
mance. According to their results firms with mean age 37 years
and standard deviation
of age 9.5 years have the highest value added per employee.
Ilmakunnas et al. (2004)
used Finnish data using averages of employee age and tenure
(and their powers), as
well as their standard deviations as explanatory variables for
plant total factor pro-
ductivity. Their results showed that the productivity profile
increased up to 40 years
of average age while the standard deviation of age was not
significant. Also the stan-
dard deviation of tenure was insignificant. They also used log of
average wage as an
outcome. The results indicated that tenure diversity was
positively related to average
wage. Backes-Gellner and Veen (2009) found a negative
connection between produc-
tivity and age dispersion, measured by coefficient of variation
or standard deviation of
age, with German data. However, they found positive age
diversity effects in creative
tasks and innovative companies. Also Göbel and Zwick (2009)
used German data. In
their study age dispersion was not significant in fixed effects
estimations. Göbel and
Zwick (2010) had survey information on whether firms use age-
mixed teams. Inter-
acting this with age group share variables they obtained the
result that the productivity
of both the oldest and the youngest was higher in firms using
this practice.
Besides age diversity, another aspect that has been studied is
skill or occupational

diversity.3 Abowd and Kramarz (2005) augmented a production
function with mea-
sures of human capital and variance of human capital, obtained
from an individual-
level wage equation. Estimation with French data showed that
the variance of time-
varying employee characteristics (characteristics multiplied by
their coefficients in the
wage equation) had a positive relationship with productivity,
but the variance of per-
3 Linked employer-employee data have also been used in
studies where wage dispersion has been consid-
ered as an indicator of workforce diversity. Winter-Ebmer and
Zweimüller (1999), Lallemand et al. (2004),
and Heyman (2005), among others, have analyzed whether wage
dispersion (measured by variance of wages
or variance of wage equation residual) is related to productivity.
123
son effects (which were further decomposed to observed, i.e.
related to time-invariant
personal characteristics, and unobserved parts) was negatively
related to productivity.
Iranzo et al. (2008) used person fixed effects from an estimated
wage equation as a
measure of skills and examined the role of skill dispersion on
productivity using Italian
data. They found positive effects from within-occupation skill
diversity, but negative
from between-occupation diversity. Navon (2009) measured

knowledge diversity by a
Herfindahl index that accounted for both the number of skilled
workers and their disci-
plines and found positive productivity effects with Israeli data.
Barrington and Troske
(2001) examined the role of racial and occupational diversity in
firm performance in
the US, finding either positive or non-significant effects.
Parrotta et al. (2010) used
Danish data and measured diversities with Herfindahl indexes.
They obtained positive
skill diversity effects on total factor productivity. In Grund and
Westergård-Nielsen
(2008) the standard deviation of education was negatively
related to labor productivity
in fixed effects estimation (although positively related in OLS),
whereas in Ilmakunnas
et al. (2004) it was positively related to total factor
productivity. Some LEED studies
have used wages as the outcome. Ilmakunnas et al. (2004)
studied the connection of
educational diversity with average wage, finding a positive
relationship. Battu et al.
(2003) examined the relationship between individual wages and
educational disper-
sion, also finding a positive relationship with UK data.
In addition to the linked employer-employee data studies, there
are studies that
examine diversity effects in smaller samples of firms, or at a
more disaggregate level,
usually within a single firm or team. Just to mention a few
examples where relatively
large single-firm data sets have been available, Weiss (2007)
found that age diversity
was negatively related to productivity (measured by scrap rate)

Review of Research on Workforce Diversity in Public Sector

Review of Research on Workforce Diversity in Public Sector

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Review of Research on Workforce Diversity in Public Sector