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Labour market discrimination as an agency cost

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Author Info
Pierre-Guillaume Méon () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.)
Ariane Szafarz () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.)

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Abstract

This paper studies labour market discriminations as an agency problem. It sets up a principal-agent model of a firm, where the manager is a taste discriminator and has to make unobservable hiring decisions that determine the shareholder’s profits because workers differ in skills. The paper shows that performance-based contracts may moderate the manager’s propensity to discriminate, but that it is unlikely to fully eliminate discrimination.

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File URL: http://www.solvay.edu/EN/Research/Bernheim/documents/wp08019.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) in its series Working Papers CEB with number 08-019.RS.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 26 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:sol:wpaper:08-019

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Related research
Keywords: discrimination; agency theory; hiring.;

Other versions of this item:

Find related papers by JEL classification:
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions

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