Does power-sharing diminish or accentuate ethnic divisions? In spite of this question's critical importance, there remains fundamental disagreement on the identity-related consequences of power-sharing. Drawing on social psychology, I identify three mechanisms which connect power-sharing with the salience of ethnic boundaries and their politicization. First, power-sharing reduces the congruence between ethnic identities and political status attainments. Thereby, it decreases the value of ethnic boundaries both for individuals' cognitive uncertainty reduction and for elite mobilization. Second, however, specifically corporate power-sharing institutions enhance the cognitive accessibility of ethnic boundaries. Thereby, they conversely increase their salience and elite incentives to emphasize them. Finally, if adopted in the immediate wake of civil conflict, power-sharing helps alleviate identity threats faced by members of previously marginalized groups. Thereby, it sharply reduces ethnic salience in the short-term. I examine these expectations at both the individual and group levels. First, I use mass survey data comprising 149'000 minority respondents from 97 countries to investigate the consequences of power-sharing for ethnic identification. I construct a series of hierarchical multi-level models that exploit both between- and within-group variation. Second, I use new data on ethnic organizations' electoral performance on both the national and subnational levels to examine the consequences of power-sharing for elites' politicization of ethnic boundaries. Together, the results from these analyses highlight the heterogeneous identity-related consequences of power-sharing, depending on its institutional type and ethno-political context in which it is adapted. Thereby, the findings illuminate not only how power-sharing affects ethnic divisions, but also the mechanisms connecting them.