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The Impact of Affirmative Action on Labor Demand: A Test of Some Implications of the Le Chatelier Principle


  • Griffin, Peter


This paper presents an alternative approach to measuring the impact of affirmative action on firms. Affirmative action is modeled as a series of hiring quotas. If the quotas are binding, then a firm subject to affirmative action will operate with greater costs of production, have less elastic demand for inputs, and be less able to substitute between most inputs. The results are consistent with the hypothesis that affirmative-action regulations significantly constrain firms' behavior. Own-wage elasticities are less elastic and most inputs are less substitutable for constrained firms. Further, affirmative action raises costs by 6.5 percent for firms subject to the program. Copyright 1992 by MIT Press.

Suggested Citation

  • Griffin, Peter, 1992. "The Impact of Affirmative Action on Labor Demand: A Test of Some Implications of the Le Chatelier Principle," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 251-260, May.
  • Handle: RePEc:tpr:restat:v:74:y:1992:i:2:p:251-60

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    References listed on IDEAS

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    Cited by:

    1. Mohammad Ashraf, 2007. "Factors Affecting Female Employment In Male-Dominated Occupations: Evidence From The 1990 And 2000 Census Data," Contemporary Economic Policy, Western Economic Association International, vol. 25(1), pages 119-130, January.
    2. Huang, Kevin X.D. & Meng, Qinglai & Xue, Jianpo, 2009. "Is forward-looking inflation targeting destabilizing? The role of policy's response to current output under endogenous investment," Journal of Economic Dynamics and Control, Elsevier, vol. 33(2), pages 409-430, February.
    3. Huang, Kevin X.D. & Meng, Qinglai, 2012. "Increasing returns and unsynchronized wage adjustment in sunspot models of the business cycle," Journal of Economic Theory, Elsevier, vol. 147(1), pages 284-309.
    4. Merkl, Christian & Snower, Dennis, 2009. "Monetary Persistence, Imperfect Competition, And Staggering Complementarities," Macroeconomic Dynamics, Cambridge University Press, vol. 13(01), pages 81-106, February.
    5. Nooman Rebei & Steven Ambler & Ali Dib, 2004. "Optimal Taylor Rules in an Estimated Model of a Small Open Economy," Econometric Society 2004 North American Summer Meetings 627, Econometric Society.
    6. Kevin Huang & Z. Liu, "undated". "Staggered contracts and business cycle persistence," Working Papers 2000-08, Utah State University, Department of Economics.
    7. Chahnez Boudaya, 2006. "Stage-specific technology shocks and employment :could we reconcile with the RBC models ?," Cahiers de la Maison des Sciences Economiques v06043, Université Panthéon-Sorbonne (Paris 1).
    8. Casares, Miguel, 2006. "Time-to-build, monetary shocks, and aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 53(6), pages 1161-1176, September.
    9. Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2015. "The own-wage elasticity of labor demand: A meta-regression analysis," European Economic Review, Elsevier, vol. 80(C), pages 94-119.
    10. Francesco Lippi, 2003. "Strategic Monetary Policy with Non-Atomistic Wage Setters," Review of Economic Studies, Oxford University Press, vol. 70(4), pages 909-919.
    11. Huang, Kevin X. D. & Liu, Zheng, 2002. "Staggered price-setting, staggered wage-setting, and business cycle persistence," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 405-433, March.
    12. Nooman Rebei, 2004. "Characterization of the Dynamic Effects of Fiscal Shocks in a Small Open Economy," Staff Working Papers 04-41, Bank of Canada.
    13. Zheng Liu & Louis Phaneuf, 2004. "What Explains the Effects of Technology Shocks on Labor Market Dynamics?," Emory Economics 0414, Department of Economics, Emory University (Atlanta).
    14. Louis Phaneuf & Nooman Rebei, 2007. "Technology Shocks and Business Cycles: The Role of Processing Stages and Nominal Rigidities," Staff Working Papers 07-7, Bank of Canada.
    15. Casares, Miguel & McCallum, Bennett T., 2006. "An optimizing IS-LM framework with endogenous investment," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 621-644, December.
    16. Alain Paquet & Louis Phaneuf & Nooman Rebei, 2003. "The Macroeconomic Effects of Military Buildups in a New Neoclassical Synthesis Framework," Staff Working Papers 03-12, Bank of Canada.
    17. K. Huang & Z. Liu & L. Phaneuf, "undated". "Staggered contracts, intermediate goods and the dynamic effects of monetary shocks on output, inflation and real wages," Working Papers 2000-20, Utah State University, Department of Economics.
    18. Kevin X.D. Huang & Zheng Liu & Louis Phaneuf, 2004. "Why Does the Cyclical Behavior of Real Wages Change Over Time?," American Economic Review, American Economic Association, vol. 94(4), pages 836-856, September.
    19. Beaurain, Guillaume & Masclet, David, 2016. "Does affirmative action reduce gender discrimination and enhance efficiency? New experimental evidence," European Economic Review, Elsevier, vol. 90(C), pages 350-362.
    20. Ekaterina V. Peneva, 2009. "Factor intensity and price rigidity: evidence and theory," Finance and Economics Discussion Series 2009-07, Board of Governors of the Federal Reserve System (U.S.).
    21. Steve Ambler & Ali Dib & Nooman Rebei, 2003. "Nominal Rigidities and Exchange Rate Pass-Through in a Structural Model of a Small Open Economy," Staff Working Papers 03-29, Bank of Canada.
    22. Casares, Miguel, 2002. "Time-to-build approach in a sticky price, sticky wage optimizing monetary model," Working Paper Series 0147, European Central Bank.
    23. Louis Phaneuf & Nooman Rebei, 2008. "Production Stages and the Transmission of Technological Progress," Cahiers de recherche 0802, CIRPEE.
    24. Furlanetto, Francesco & Natvik, Gisle J. & Seneca, Martin, 2013. "Investment shocks and macroeconomic co-movement," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 208-216.
    25. Wei Dong, 2013. "The Quantitative Importance of the Expenditure-Switching Effect," Open Economies Review, Springer, vol. 24(2), pages 311-338, April.

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