Induced Discrimination and Firm Size: Information vs Incentive Effects

Induced Discrimination and Firm Size: Information vs Incentive Effects This paper characterizes the differences in incentives to respond adversely to the Civil Rights Act of 1991 CRA91 across firm size. I then empirically test the firm responses and compare them to the incentives. I find that responses across firm size match the incentive differences. Thus firms appear to be rational as well as fully informed. The most pronounced adverse response comes from large firms. Firms with more than 100 employees reversed a trend of increasing employment at a rate of 0.28 weeks worked per year prior to CRA91 to a trend of decreasing employment at a rate of −0.21 weeks per year. Since this group employs 63.7 of the workforce, this has a profound impact on opportunities for protected groups. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Induced Discrimination and Firm Size: Information vs Incentive Effects

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2005 by Springer
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-004-6490-z
Publisher site
See Article on Publisher Site

Abstract

This paper characterizes the differences in incentives to respond adversely to the Civil Rights Act of 1991 CRA91 across firm size. I then empirically test the firm responses and compare them to the incentives. I find that responses across firm size match the incentive differences. Thus firms appear to be rational as well as fully informed. The most pronounced adverse response comes from large firms. Firms with more than 100 employees reversed a trend of increasing employment at a rate of 0.28 weeks worked per year prior to CRA91 to a trend of decreasing employment at a rate of −0.21 weeks per year. Since this group employs 63.7 of the workforce, this has a profound impact on opportunities for protected groups.

Journal

Small Business EconomicsSpringer Journals

Published: Mar 9, 2004

References

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