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Who benefits from minority business set-asides? The case of New Jersey

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Author Info

  • Samuel L. Myers

    (The Humphrey Institute of Public Affairs, University of Minnesota, 301 19th Avenue South, Minneapolis, MN 55455)

  • Tsze Chan

    (Pelavin Research Institute, Washington, DC)

Abstract

Race-based remedies often are justified by evidence of prior discrimination. They work when they benefit groups previously disadvantaged. This article examines one such remedy-minority business set-asides-and its application in the award of public procurement and construction contracts by the state of New Jersey. Analyzed are contract awards to minority and non-minority|non-women-owned business enterprises in 1990, as well as in periods before, during, and after the imposition of a state minority set-aside program. Using a conventional decomposition approach, the article reveals significant discriminatory gaps in the success of minority- versus non-minority-owned firms in obtaining contracts from the state of New Jersey. The analysis suggests that minority contracting success rates fell from the pre-set-aside era to the set-aside era and that discriminatory outcomes persisted. The particular remedy chosen-while justified based on evidence of prior discrimination-appears not to have reduced the original discrimination nor did it unambiguously benefit minority businesses.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 15 (1996)
Issue (Month): 2 ()
Pages: 202-226

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Handle: RePEc:wly:jpamgt:v:15:y:1996:i:2:p:202-226

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Web page: http://www3.interscience.wiley.com/journal/34787/home

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References

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  1. Timothy Bates, 1981. "Effectiveness of the small business administration in financing minority business," The Review of Black Political Economy, Springer, vol. 11(3), pages 321-336, March.
  2. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
  3. Faith Ando, 1988. "Capital issues and the minority-owned business," The Review of Black Political Economy, Springer, vol. 16(4), pages 77-109, March.
  4. Knight, Kenneth E & Dorsey, Terry, 1976. "Capital Problems in Minority Business Development: A Critical Analysis," American Economic Review, American Economic Association, vol. 66(2), pages 328-31, May.
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Cited by:
  1. Chatterji, Aaron K & Chay, Kenneth Y & Fairlie, Robert W, 2013. "The Impact of City Contracting Set-Asides on Black Self-Employment and Employment," Santa Cruz Department of Economics, Working Paper Series qt479755b2, Department of Economics, UC Santa Cruz.
  2. Marion, Justin, 2007. "Are bid preferences benign? The effect of small business subsidies in highway procurement auctions," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1591-1624, August.
  3. Timothy Bates, 2002. "Minority businesses serving government clients amidst prolonged chaos in preferential procurement programs," The Review of Black Political Economy, Springer, vol. 29(3), pages 51-70, December.
  4. Bates, Timothy, 2002. "Restricted access to markets characterizes women-owned businesses," Journal of Business Venturing, Elsevier, vol. 17(4), pages 313-324, July.
  5. Manuel Carvajal, 2006. "Economic grounds for affirmative action: The evidence on architects and engineers in South Florida," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 515-538.
  6. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
  7. Robert Fairlie & Justin Marion, 2012. "Affirmative action programs and business ownership among minorities and women," Small Business Economics, Springer, vol. 39(2), pages 319-339, September.

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