“Potential” and the Gender Promotion Gap
Abstract
We show that subjective assessments of employee “potential” contribute to gender gaps in promotion and pay. Using data on 29,809 management-track employees from a large retail chain, we find that women receive substantially lower potential ratings despite receiving higher performance ratings. Differences in potential ratings account for approximately half of the gender promotion gap. Women’s lower potential ratings do not reflect accurate forecasts of future performance: Women subsequently outperform male colleagues, both on average and on the margin of promotion. We highlight two mechanisms driving the gender potential gap: strategic retention and stereotyping. (JEL J16, J31, J71, L81, M12, M51)
Fields of Study & Subjects
Gender Diversity and Inequality
Job Satisfaction and Organizational Behavior
Work-Family Balance Challenges
Publication details
- Journal / source
- American Economic Review
- Publisher
- American Economic Association
- Volume
- 116
- Issue
- 2
- Pages
- 375–417
- Publication date
- 30 January 2026
- Language
- EN