Researchers examined "stigmatised" characteristics - being lesbian, gay, bisexual or transgender (LGBT), or having a history of poverty or mental or physical illness.
They found that concealing such characteristics from colleagues resulted in lower self-esteem, job satisfaction and commitment at work.
"People may choose to conceal stigmatised identities because they want to be accepted, but in fact doing so reduces feelings of belonging," said Professor Manuela Barreto of the University of Exeter in the UK.
"When someone conceals their true identity, their social interactions suffer - and this has an impact not just on the individual but also on the organisation they work for," said Barreto.
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Despite highlighting the costs of concealment, the researchers do not suggest that everyone must be open in all contexts.
"It is clear that there are times when revealing a stigmatised identity can be very costly," said Anna Newheiser of the University at Albany in the US.
"Those effects are very real and worth avoiding in certain circumstances, but it is important to realise that there is also a cost to hiding your true self," said Newheiser.
The study highlights the "hidden ramifications of prejudice", which harm both individuals and organisations.
"Workplaces that push individuals to hide their differences do not erase difference - they simply encourage masking and concealment of diversity," he said.
"Given that identity concealment is by nature an invisible act, its social and organisational costs may also be difficult to detect, explain and correct," he added.
For the study, participants were encouraged to remember a time when they either concealed or revealed a stigmatised characteristic about themselves.
In both, participants were asked how they would feel after concealing or revealing the stigmatised characteristic.