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Implicit Quotas


  • Fryer, Roland


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).

Suggested Citation

  • Fryer, Roland, 2009. "Implicit Quotas," Scholarly Articles 2940155, Harvard University Department of Economics.
  • Handle: RePEc:hrv:faseco:2940155

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    References listed on IDEAS

    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.
    2. Bardsley, Peter, 1996. "Tax Compliance Games with Imperfect Auditing," Public Finance = Finances publiques, , vol. 51(4), pages 473-489.
    3. 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.
    4. Brian Erard & Jonathan S. Feinstein, 1994. "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 1-19, Spring.
    5. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, January.
    6. Roland Fryer & Glenn C. Loury & Tolga Yuret, 2003. "Color-Blind Affirmative Action," NBER Working Papers 10103, National Bureau of Economic Research, Inc.
    7. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
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    Cited by:

    1. Blumkin, Tomer & Margalioth, Yoram & Sadka, Efraim, 2009. "Incorporating affirmative action into the welfare state," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1027-1035, October.
    2. Yenmez, M. Bumin & Yildirim, Muhammed Ali & Hafalir, Isa Emin, 2013. "Effective affirmative action in school choice," Theoretical Economics, Econometric Society, vol. 8(2), May.

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