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Diversity and Affirmative Action in Higher Education

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  • DENNIS EPPLE
  • RICHARD ROMANO
  • HOLGER SIEG

Abstract

We examine the practice of affirmative action and consequences of its proscription on the admission and tuition policies of institutions of higher education in a general equilibrium framework. Colleges are differentiated ex ante by endowments and compete for students that differ by race, household income, and academic qualification. Proscription of affirmative action requires that admission and tuition policies are race blind. Colleges then use the informational content about race in income and academic qualification in reformulating their optimal policies. We find that minority students pay lower tuition and attend higher‐quality schools because of affirmative action. A ban of affirmative action will lead to a substantial decline of minority students in the top‐tier colleges.

Suggested Citation

  • Dennis Epple & Richard Romano & Holger Sieg, 2008. "Diversity and Affirmative Action in Higher Education," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(4), pages 475-501, August.
    • Handle: RePEc:bla:jpbect:v:10:y:2008:i:4:p:475-501
    DOI: 10.1111/j.1467-9779.2008.00373.x
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