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Implicit Quotas

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  • Roland G. Fryer, Jr.

Abstract

Employment or admission "goals" are often preferred to affirmative action as a way of obtaining diversity. By constructing a simple model of employer-auditor interaction, I show that when an auditor has imperfect information regarding employers' proclivities to discriminate and the fraction of qualified minorities in each employer's applicant pool, goals are synonymous with quotas. Technically speaking, any equilibrium of the auditing game involves a nonempty set of employers who hire so that they do not trigger an audit by rejecting qualified nonminorities, hiring unqualified minorities, or both. Further, under some assumptions, explicit quotas (those mandated by an auditor) are more efficient than implicit quotas (goals settled on in equilibrium by employers wishing to avoid an audit). (c) 2009 by The University of Chicago. All rights reserved.

Suggested Citation

  • Roland G. Fryer, Jr., 2009. "Implicit Quotas," The Journal of Legal Studies, University of Chicago Press, vol. 38(1), pages 1-20, January.
    • Handle: RePEc:ucp:jlstud:v:38:y:2009:i:1:p:1-20
    DOI: 10.1086/596194
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    References listed on IDEAS

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    1. Lawarree, Jacques P. & Van Audenrode, Marc A., 1992. "Cost observation, auditing and limited liability," Economics Letters, Elsevier, vol. 39(4), pages 419-423, August.
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    8. Tolga Yuret, 2008. "An Economic Analysis of Color-Blind Affirmative Action," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 24(2), pages 319-355, October.
    9. Roland G. Fryer Jr. & Glenn C. Loury, 2005. "Affirmative Action and Its Mythology," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 147-162, Summer.
    10. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
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