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Implicit Quotas

  • Fryer, Roland
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    Employment or admission “goals†are often preferred to affirmative action as a way of obtaining diversity. By constructing a simple model of employerâ€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).

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    File URL: http://dash.harvard.edu/bitstream/handle/1/2940155/implicit%20quotas.pdf
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    Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2940155.

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    Date of creation: 2009
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    Publication status: Published in Journal of Legal Studies
    Handle: RePEc:hrv:faseco:2940155
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    Web page: http://www.economics.harvard.edu/

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    1. Bardsley, Peter, 1996. "Tax Compliance Games with Imperfect Auditing," Public Finance = Finances publiques, , vol. 51(4), pages 473-89.
    2. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
    3. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
    4. Roland G. Fryer, Jr. & Glenn C. Loury, 2005. "Affirmative Action and Its Mythology," NBER Working Papers 11464, National Bureau of Economic Research, Inc.
    5. Roland G. Freyer, Jr. & Glenn C. Loury & Tolga Yuret, 2003. "Color Blind Affirmative Action," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-131, Boston University - Department of Economics.
    6. 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.
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