Implicit Quotas

Abstract

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).Since President Nixon was here in my job, America has used goals and timetables to preserve opportunity and to prevent discrimination, to urge businesses to set higher expectations for themselves and to realize those expectations. But we did not and we will not use rigid quotas to mandate outcomes.