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Affirmative Action, Shifting Competition, and Human Capital Accumulation: A Comparative Static Analysis of Investment Contests

Author

Listed:
  • Christopher Cotton

    (Queen's University)

  • Brent R. Hickman

    (Olin Business School, University of Washington)

  • Joseph P. Price

    (Brigham Young University)

Abstract

We develop a model in which many heterogeneous agents invest in human capital as they compete for better college admission slots or employment opportunities. The model provides theoretical predictions about how affirmative action or preferential treatment policies change the distribution of effort, human capital accumulation, and job/college slot allocations across different population groups. Our findings deliver two key insights. First, incentives to invest in human capital depends substantially on the strength of one's competition. Second, we find evidence of a counter-intuitive role for preferential treatment in promoting overall human capital development.

Suggested Citation

  • Christopher Cotton & Brent R. Hickman & Joseph P. Price, 2020. "Affirmative Action, Shifting Competition, and Human Capital Accumulation: A Comparative Static Analysis of Investment Contests," Working Paper 1433, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1433
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1433.pdf
    File Function: First version 2020
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    References listed on IDEAS

    as
    1. Moro, Andrea & Norman, Peter, 2003. "Affirmative action in a competitive economy," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 567-594, March.
    2. Eleanor Wiske Dillon & Jeffrey Andrew Smith, 2020. "The Consequences of Academic Match between Students and Colleges," Journal of Human Resources, University of Wisconsin Press, vol. 55(3), pages 767-808.
    3. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
    4. Peter Arcidiacono & Esteban M. Aucejo & V. Joseph Hotz, 2016. "University Differences in the Graduation of Minorities in STEM Fields: Evidence from California," American Economic Review, American Economic Association, vol. 106(3), pages 525-562, March.
    5. Coate, Stephen & Loury, Glenn, 1993. "Antidiscrimination Enforcement and the Problem of Patronization," American Economic Review, American Economic Association, vol. 83(2), pages 92-98, May.
    6. Moldovanu, Benny & Sela, Aner, 2006. "Contest architecture," Journal of Economic Theory, Elsevier, vol. 126(1), pages 70-96, January.
    7. Jesse Rothstein & Albert H. Yoon, 2007. "Affirmative Action in Law School Admissions: What Do Racial Preferences Do?," Working Papers 20, Princeton University, School of Public and International Affairs, Education Research Section..
    8. Long, Mark C., 2008. "College quality and early adult outcomes," Economics of Education Review, Elsevier, vol. 27(5), pages 588-602, October.
    9. Gunter J. Hitsch & Ali Hortaçsu & Dan Ariely, 2010. "Matching and Sorting in Online Dating," American Economic Review, American Economic Association, vol. 100(1), pages 130-163, March.
    10. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
    11. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
    12. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
    13. Bodoh-Creed, Aaron L. & Hickman, Brent R., 2018. "College assignment as a large contest," Journal of Economic Theory, Elsevier, vol. 175(C), pages 88-126.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Frances Xu Lee & Wing Suen, 2023. "Gaming A Selective Admissions System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 413-443, February.
    2. Rodrigo Zeidan & Silvio Luiz de Almeida & In'acio B'o & Neil Lewis Jr, 2023. "Racial and income-based affirmative action in higher education admissions: lessons from the Brazilian experience," Papers 2304.13936, arXiv.org.

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    More about this item

    Keywords

    large contest; all-pay contest; all-pay auction; affirmative action; college admissions; field experiment; human capital;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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