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The Modern Corporation as a Safe Haven for Taste-Based Discrimination: An Agency Model of Hiring Decisions

  • Pierre-Guillaume Méon
  • Ariane Szafarz

This paper proposes a principal–agent model of labour market discrimination. In this model, the firm manager is a taste-based discriminator and has to make unobservable hiring decisions that determine the shareholder's profits, because workers differ in skill. The model shows that performance-based contracts may moderate the manager's propensity to discriminate, but that they are unlikely to fully eliminate discrimination. Moreover, the model predicts that sectors with high skill leverages discriminate less. Finally, the impacts of a wage gap between groups and of a diversity premium are investigated.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/88635.

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Date of creation: 2011
Date of revision:
Publication status: Published in: Labour economics (2011) v.18 n° 4,p.487-497
Handle: RePEc:ulb:ulbeco:2013/88635
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  6. Ariane Szafarz, 2008. "An Alternative to Statistical Discrimination," ULB Institutional Repository 2013/14329, ULB -- Universite Libre de Bruxelles.
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  9. Danièle Meulders & Robert Plasman & Michele Cincera & Séverine Lemière & Stéphane Danis & Sile Padraigin O'Dorchai & Ilan Tojerow & Maria Jepsen & Amynah Vanessa Gangji & David Moreno & Maria Caprile , 2003. "Women in industrial research - Analysis of statistical data and good practices of companies," ULB Institutional Repository 2013/7728, ULB -- Universite Libre de Bruxelles.
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  23. Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 301-24, Fall.
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  27. repec:ebl:ecbull:v:10:y:2008:i:5:p:1-6 is not listed on IDEAS
  28. repec:pri:indrel:430 is not listed on IDEAS
  29. repec:fth:prinin:430 is not listed on IDEAS
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