Implicit Quotas

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. [President William J. Clinton, July 19, 1995] I am for Affirmative Action, as I describe it, but not for quotas or preferences. [President George W. Bush, April 2, 2000] We do not think it matters whether a government hiring program imposes hard quotas, soft quotas, or goals. Any of these techniques induces an employer to hire with an eye toward meeting the numerical target. [Judge Laurence Silberman, Lutheran Church–Missouri Synod v. FCC, 141 F.3d 344 (D.C. Cir. 1998)] ROLAND G. FRYER, JR., is Professor of Economics at Harvard University and Faculty Research Fellow at the National Bureau of Economic Research. I would like to thank Lavone Norwood, Corporate Executive Director of Employee Relations, for extensive dis2 / T H E J O U R N A L O F L E G A L S T U D I E S / V O L U M E 3 8 ( 1 ) / J A N U A R Y 2 0 0 9