Discrimination, quotas, and wage-transparency rules
Economic Theory
Final Report Abstract
The project consists of three individual papers, each dealing with regulations to counteract discrimination in labor markets (e.g., regarding wage payments and promotion decisions). Specifically, the effects of quotas, wage transparency regulations, and working time limits are examined. Quota regulations allow disadvantaged groups to demonstrate their skills to firms. As a result, firms gain information about groups they would not have interacted with without quota regulations. This can lead to the correction of stereotypes, implying that quota regulations may only need to be used temporarily to eliminate discrimination. Wage transparency rules provide employees with information about their value for firms. Therefore, such rules help employees make more adequate wage demands. At the same time, they can lead to strategic behavior on the part of firms, which can disadvantage employees. Experimental studies suggest that people are often overconfident and that this trait is more prevalent for men than for women. In promotion competitions, this can lead men to compete harder and, for example, work many overtime hours. Working time limits counter this type of behavior and improve the promotion opportunities of women.
