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Valuing Identity

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  • Roland G. Fryer, Jr.
  • Glenn Loury

Abstract

Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for positions in a hierarchy. The problem of designing an efficient policy to raise the status in this competition of a disadvantaged identity group is considered. We show that: (i) when agent identity is fully visible and contractible (sightedness), efficient policy grants preferred access to positions, but offers no direct assistance for acquiring skills; and, (ii) when identity is not contractible (blindness), efficient policy provides universal subsidies when the fraction of the disadvantaged group at the development margin is larger then their mean (across positions) share at the assignment margin.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16568.

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Date of creation: Dec 2010
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Publication status: published as “Valuing Identity” (with G. Loury) [Available as NBER Working Paper No. 16568], Revised May 2012 [forthcoming in Journal of Political Economy]
Handle: RePEc:nbr:nberwo:16568

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  1. Roland G. Fryer Jr. & Glenn C. Loury, 2005. "Affirmative Action and Its Mythology," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 147-162, Summer.
  2. Andrea Moro & Peter Norman, . ""Affirmative Action in a Competitive Economy''," CARESS Working Papres 96-08, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  3. Roland Fryer & Glenn Loury, 2005. "Affirmative action in winner-take-all markets," Journal of Economic Inequality, Springer, vol. 3(3), pages 263-280, December.
  4. Harry Holzer & David Neumark, 1999. "Assessing Affirmative Action," NBER Working Papers 7323, National Bureau of Economic Research, Inc.
  5. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-47, June.
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Cited by:
  1. Durante, Ruben & Labartino, Giovanna & Perotti, Roberto, 2011. "Academic Dynasties: Decentralization and Familism in the Italian Academia," CEPR Discussion Papers 8645, C.E.P.R. Discussion Papers.
  2. Yannis M. Ioannides, 2009. "Review: Scott E. Page The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies," Discussion Papers Series, Department of Economics, Tufts University 0729, Department of Economics, Tufts University.
  3. Laurence Kranich, 2012. "A Simple Theoretical Argument for Affrmative Action," Discussion Papers 12-05, University at Albany, SUNY, Department of Economics.

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