Discrimination in Organizations: Optimal Contracts and Regulation

主讲人: Wiroy Shin

Associate Research Fellow, Korea Institute for Industrial Economics & Trade (KIET)

Please see Dr. Shin's CV for more information.

主持人: Inkee Jang

A number of the largest U.S. firms have been involved in labor discrimina-tion despite having policies in place designed to avoid that outcome. This paper diagnoses the phenomenon and proposes contractual and regulatory solutions to ameliorate the situation. Existing research (e.g., Becker (1957), Coate and Loury (1993)) studies a situation in which an individual person practices discrimination. In contrast, this paper considers a hierarchical organization in which a manager (the agent) may or may not have a discriminatory taste toward his subordinates, whereas an owner (the principal), who is ignorant of the manager’s taste and sub-ordinate workers’ productivity levels, is unbiased and only cares about profit. In this environment, I study a direct mechanism and characterize an optimal contract. Additionally, I compare the allocation implemented by the optimal direct mechanism to the first-best (full information) allocation and discuss the effectiveness of current regulations (e.g., affirmative action): I find that a regulator (such as the U.S. Equal Employment Opportunity Commission) can improve compliance with non-discriminatory conduct, despite the fact that the person on whom the regula-tion is directly incident—the principal—is not intrinsically biased. I also show that the regulation can be counter-productive if it attempts to enforce perfect fairness (the ?rst-best allocation) when that allocation is not incentive feasible. Finally, I review the U.S. law of discrimination and analyze statutory and jurisprudential issues regarding the optimal mechanism.

时间: 2018-04-12(Thursday)16:40-18:00
地点: N302, Econ Building
期数: 高级经济学系列讲座2018春季学期第五讲(总第399讲)
主办单位: WISE&SOE
类型: 系列讲座

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