In this paper, we develop a conceptual framework for understanding the impact of workforce diversity on labor market outcomes. We argue that to understand the impact of workforce diversity, we must consider the effects of power (the distribution of valued and scarce resources), status (the relationships among people and groups), and numbers (the compositional effects of the unit), whether in the work group, job, occupation, firm, or society. We then discuss the mechanisms that generate and reproduce these dimensions of inequality and explain how they contribute to everyday practices such as allocation decisions and evaluative processes and ultimately lead to sustained or durable inequality (e.g. labor force outcomes including attitudes, behaviors, and material and psychic rewards).

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