Labor Market Quotas
Tinbergen Institute Discussion Paper 2018-036/VII
29 Pages Posted: 2 May 2018
Date Written: March 29, 2018
Under-representation of women in high level positions is widespread and persistent. We analyze the consequences of labor market quotas for the wages of women in high level positions. The key point of our paper is that quotas cause asymmetric information about why women work in high level positions. Firms know why they have assigned their own female employees to high level positions, but do not know why women at other firms have been assigned to those positions. A winner’s curse, reducing competition for women in high level positions, results. This widens the gender pay gap. We show that ex ante women are better-off without quotas. Next, we investigate how quotas affect incentives for employers to learn the abilities of women to make better job-assignment decisions. Then, under specific conditions women may benefit from quotas.
Keywords: labor market quota, winners curse, screening
JEL Classification: D83, J22
Suggested Citation: Suggested Citation