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The Economics of Discriminatory Job Reservations

Author

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  • James P. Choy

Abstract

A society reserves certain jobs for members of a politically dominant social group to maximize the wages of workers in that group. Through an appropriate choice of reserved jobs, the dominant group chooses both the size of the set of reserved jobs and the elasticity of substitution between reserved and unreserved jobs. Optimal discrimination endogenously creates categories of "good" and "bad" jobs and assigns workers from different social groups into these different categories. The relative scarcity of labor determines whether discrimination or free labor markets are optimal. I apply the model to apartheid South Africa and other discriminatory societies.

Suggested Citation

  • James P. Choy, 2026. "The Economics of Discriminatory Job Reservations," American Economic Journal: Microeconomics, American Economic Association, vol. 18(3), pages 361-391, August.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:3:p:361-91
    DOI: 10.1257/mic.20250072
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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • N37 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Africa; Oceania

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