Firm level hiring policy with culturally biased testing
This paper explores the implications for labor market outcomes of systematic testing of applicants in the hiring process. A matching model in which productivity is a worker's private information is used. Both wages and hiring rates are endogenous. A minority is defined as a group for whom the test is less precise in identifying individual productivity. Welfare and employment outcomes across various hiring policies are compared. Simulations suggest that tests are typically too accurate so that in a laissez faire economy minority group members fair better than the majority group members. Rules requiring equity in hiring reverse this result.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.|
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|Order Information:|| Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.|
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