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Efficiency Wages, Tournaments, and Discrimination: A Theory of Employment Discrimination Law for 'High-Level' Jobs

Harvard Law School, Center for Law, Economics, and Business, Discussion Paper No. 182

Posted: 29 Apr 1997  

David Charny

Harvard Law School

G. Mitu Gulati

Duke University School of Law

Date Written: March 1996

Abstract

This paper analyzes the effects of discrimination law on discrimination in allocating "high-level" jobs. These are jobs characterized by substantial periods of training, high skill levels, and discretion (low or moderate monitoring). The analysis considers the incentives that an employer's hiring and promotion discrimination would create job applicants and workers who choose various career "strategies," based on preferences, skills and perceived opportunities. Applicants or workers who face discrimination alter their career strategies in ways that support the rationality of continued firm discrimination and that lead to an under-investment in human capital. The current legal rules against discrimination are largely ineffective in dealing with discrimination of this type; the analysis suggests, therefore, that the legal regime as applied to "high-level" jobs should be abandoned or substantially modified.

JEL Classification: J71, K31

Suggested Citation

Charny, David and Gulati, G. Mitu, Efficiency Wages, Tournaments, and Discrimination: A Theory of Employment Discrimination Law for 'High-Level' Jobs (March 1996). Harvard Law School, Center for Law, Economics, and Business, Discussion Paper No. 182. Available at SSRN: https://ssrn.com/abstract=10415

David Charny (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-495-3126 (Phone)
617-495-1110 (Fax)

Gaurang Mitu Gulati

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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