This paper uses the British Workplace Employee Relations Survey to investigate the impact of gender and ethnic diversity on workers’ level of trust in managers and the extent of identity with the values and objectives of the firm – dimensions of what we might call social capital within the workplace. These are both factors that one might expect to make firms more co-operative and, hence, productive. In contrast to much of the existing literature we pay particular attention to the estimation of causal effects, using an instrumental variable strategy. We find evidence that both women and minorities have higher levels of workplace trust and identity as individuals. But we also find evidence that a higher female share in the plant is associated with higher trust and identity (stronger for trust than identity) and that a higher minority share is associated lower trust and identity (stronger for identity than trust). However, in line with much of the literature, these results are not always significantly different from zero and they are sensitive to specification
