Political Solutions to Discriminatory Behavior

Discriminatory treatment of minorities by public authorities remains a serious challenge and breaks with the central principles of impartiality. However, little research examines how discrimination can be reduced through political means. This article argues that discrimination occurs when the perceived marginal cost of serving a minority citizen exceeds the funding per user and/or when excess of demand forces the provider to prioritize which citizens to serve. This also suggests that increasing the funding per user and increasing supply to meet demand might reduce differential treatment. These predictions are tested in a high school enrollment system where the funding is linked to the number of students enrolled. Unique, fine-grained administrative data show that minority applicants are 9 percentage points less likely to be enrolled in their preferred high school. More importantly, an administrative reform shows how increasing the supply-side flexibility and pay per user cuts the difference in half.