A Tradable Employment Quota
45 Pages Posted: 14 Jan 2015 Last revised: 13 Aug 2015
Date Written: July 2015
Discrimination of women in the labor market requires appropriate policy interventions. Affirmative action policies typically advocate the introduction of an employment quota uniformly applied to all firms. In a heterogeneous labor market such a policy may yield avoidable welfare losses. We propose a tradable employment quota showing its effects on wages, employment, and welfare in a labor market with search frictions and taste discrimination. A tradable employment quota appears to be a viable alternative yielding superior labor market outcomes.
Keywords: tradable employment quota, affirmative action policies, taste discrimination, labor market, search and matching, agent-based model
JEL Classification: J71, J78, C63
Suggested Citation: Suggested Citation