# An Agent-Based Simulation of How Promotion Biases Impact Corporate Gender Diversity
## 2 Background  
### Gender Biases in the Workplace  
Although female labor force participation is increasing, women are still severely underrepresented at the top levels of organizations: according to the U.S. Department of Labor, women account for almost half of the total labor force in the U.S., and roughly 45 percent of those have college degrees; however, in 2022, women only held 27% of C-suite, executive and senior-level management positions, roughly one-third of all VP-level positions [21] and just reached 10% of chief executive officer positions in Fortune 500 companies for the first time ever in early 2023 [22].  
To understand the causes of these types of gender imbalances, [PERSON] and [PERSON] [23] categorized the causes of the gender gap in upper management positions into supply-side and demand-side explanations. According to supply-side explanations, the divergence in employment outcomes between women and men is mainly due to differences in gender-specific preferences and productivity [24]; therefore, individual attributes determine the gender inequalities in the workplace [25]. For example, some believe that balancing work and family life lowers women's promotion rates as women need to take on a larger share of domestic and parental responsibilities [26]; others hypothesize that women, in general, are less competitive than men so they may be reluctant to compete for promotions [27].  
In contrast, demand-side explanations suggest that gender stratification in the workplace is primarily due to gender-specific barriers; demand-side explanations focus on the institutional constraints and managerial biases faced by women in climbing the career ladder. For example, a male-dominated board of directors may prefer to hire male executives [24], women must meet higher performance standards for promotions than their male colleagues [28; 29] and stereotypes of leadership style differences favor men in advancing into leadership roles [30].  
In this paper, we introduce a quantitative methodology that provides indirect but compelling evidence for a demand-side explanation. Specifically, we simulate the career advancement of employees in a typical organization and test the hypothetical impact of introducing gender biases in the promotion process. We find that, under a range of simple and realistic assumptions, it is possible to replicate the levels of gender disparity that are observed in typical companies across a variety of industries, with increasing male dominance at increasingly senior levels. Hence, while we cannot conclusively prove that gender imbalances are due to gender-specific barriers, we demonstrate that the existence of gender-specific barriers yields the kinds of imbalances that are observed empirically.  
Another gender-specific barrier that we examined is a bias in hiring. As suggested in a recent report by McKinsey & Company [31], in some industries women may remain underrepresented at manager levels and above because they are less likely to be hired into entry-level jobs, in addition to being less likely to be promoted into manager-level positions. To test this hypothesis, we extended our simulation to capture a simple form of hiring bias and found that by adjusting the hiring and promotion biases simultaneously, we are able to replicate industry-specific gender balance patterns across various industry sectors, as reported in the McKinsey study.