Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 8/2023: Underrepresentation, Quotas and Quality: A dynamic argument for reform

Malin Arve () and Justin Valasek ()
Additional contact information
Malin Arve: Department of Business and Management Science, Norwegian School of Economics, Postal: NHH, Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Justin Valasek: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: The trade-off between increased representation and perceived quality is central to the debate on how to address underrepresentation in high-profile professions. We address this trade-off using a dynamic model of career selection where juniors value both the identity and perceived quality of their mentors (seniors). A preference for homophily results in the persistence of underrepresentation, suggesting intervention is needed. However, if an abrupt quota causes a large decrease in the perceived quality of underrepresented seniors, then underrepresented juniors of high talent will select out of the profession, causing a permanent (real) quality difference. Encouragingly, we show that gradual reform—while decreasing perceived quality in the short term—enables a transition to equal representation and equal quality in the long term. We discuss the implications of our analysis for commonly-used measures to increase representation.

Keywords: Affirmative Action; Quotas; Mentorship; Identity; Gender; Adverse Selection.

JEL-codes: D62; E24; I20; J15; J16; J24

Language: English

36 pages, May 15, 2023

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