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Quotas and the Labor Market

Last registered on September 18, 2020

Pre-Trial

Trial Information

General Information

Title
Quotas and the Labor Market
RCT ID
AEARCTR-0004659
Initial registration date
September 06, 2019

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 06, 2019, 1:54 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
September 18, 2020, 10:58 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Primary Investigator

Affiliation
University of Cologne

Other Primary Investigator(s)

PI Affiliation
University of Cologne
PI Affiliation
University of Cologne
PI Affiliation
TU Braunschweig

Additional Trial Information

Status
In development
Start date
2019-09-12
End date
2021-09-30
Secondary IDs
Abstract
Quotas are often discussed as an engineering tool to combat discrimination in hiring decisions. Their effects within competitive labor markets, however, are not well understood yet. Indeed if quotas for promotions are enforced, a promotion can be a signal of lower ability for those who are discriminated and can lead to lower wage offers on the labor market. On the one side this might harm those who have high ability and who would have received higher wage offers without quotas. On the other side this might also harm those with low ability, since not having been promoted even though the quota was in place is a very bad signal. We aim to investigate the behavioral effects of these mechanisms.
We experimentally investigate the effect of quotas in a competitive labor market. Our setting is based on a model by Waldman (1984) which has been extended to explain discrimination and study quotas by Gürtler and Gürtler (2018). Three employers compete for three employees after promotion signals have been revealed to the market. In a baseline treatment employers and employees belong to the same group. In this setting no discrimination regarding promotions is expected. In a second treatment two groups are induced and endogenous statistical discrimination should occur, i.e., different equilibria should be selected. In a third treatment quotas are added.
External Link(s)

Registration Citation

Citation
Grundner, Stefan et al. 2020. "Quotas and the Labor Market." AEA RCT Registry. September 18. https://doi.org/10.1257/rct.4659
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2019-09-12
Intervention End Date
2019-09-13

Primary Outcomes

Primary Outcomes (end points)
The key outcome variables are the promotion decision of employers dependent on the treatments and the wage offers to employees. Since we ask employers about their expectations of other employers' behavior, we can interpret wage offers dependent on ability/promotion decision and expectations of other employers' wage offers.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
In our experiment, we introduce color groups by giving each participant a wristband in a specific color. Interacting participants might have the same or different wristband color.
Furthermore, participants are assigned a role. They either are employers or employees. Participants are sorted into labor markets such that each labor market includes 3 employers and 3 employees. Each employer is paired with an employee of her labor market. This employee is her current employee.
Employees have a randomly assigned ability (high, middle, low), which determines how valuable their work is for the employer. Depending on the employee's ability employers make a decision whether or not to promote their employee. The other employers in the labor market do not observe the ability of employees who they don't employ currently. The promotion decision on the other hand is visible.
Also, employers can make a wage offer to their own and the other two employees in their labor market. For their own employees they can make the wage offer dependent on their ability. For the other employees they can make their wage offer only dependent on whether or not the employee is promoted by her original employer. Subsequently, a set of rules decides for whom the employees will work.
The rules of the experiment are designed in a way that theoretically, tow equilibria are possible. In one equilibrium, only high ability employees are promoted. In the other equilibrium, employees with high and middle ability are promoted.
In the experimental treatments we vary the color group composition of employers and employees. We expect first, that employers are more likely to promote their employees with middle ability if they are of the same group and second, that employers expect other employers to more likely promote their middle ability employees if they are from the same group.
Experimental Design Details
Randomization Method
Random assignment of participants to a cabin in a laboratory experiment.
Randomization Unit
experimental session
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
We do not plan to use clusters in the data analysis
Sample size: planned number of observations
180 observations (180 participants in a one shot game with strategy method), 30 participants per session, 6 sessions (3 per treatment)
Sample size (or number of clusters) by treatment arms
180 participants from the Orsee pool of the Cologne Laboratory of Economic Resarch
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Ethics Comittee of the Wiso Faculty of the University of Cologne
IRB Approval Date
2019-07-24
IRB Approval Number
19021BI

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials