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

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  • 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.

Suggested Citation

  • Samuel L. Myers & Tsze Chan, 1996. "Who benefits from minority business set-asides? The case of New Jersey," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(2), pages 202-226.
  • Handle: RePEc:wly:jpamgt:v:15:y:1996:i:2:p:202-226
    DOI: 10.1002/(SICI)1520-6688(199621)15:2<202::AID-PAM3>3.0.CO;2-N
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    References listed on IDEAS

    as
    1. 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 328-331, May.
    2. Faith Ando, 1988. "Capital issues and the minority-owned business," The Review of Black Political Economy, Springer;National Economic Association, vol. 16(4), pages 77-109, March.
    3. Dennis E. Black, 1983. "Effectiveness of the Mandatory Minority Business Set-Aside Contracting Goals," Evaluation Review, , vol. 7(3), pages 321-336, June.
    4. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-243, May.
    5. Timothy Bates, 1981. "Effectiveness of the small business administration in financing minority business," The Review of Black Political Economy, Springer;National Economic Association, vol. 11(3), pages 321-336, March.
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    Cited by:

    1. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9883-5 is not listed on IDEAS
    2. Aaron K. Chatterji & Kenneth Y. Chay & Robert W. Fairlie, 2014. "The Impact of City Contracting Set-Asides on Black Self-Employment and Employment," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 507-561.
    3. repec:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9860-z is not listed on IDEAS
    4. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
    5. Timothy Bates, 2002. "Minority businesses serving government clients amidst prolonged chaos in preferential procurement programs," The Review of Black Political Economy, Springer;National Economic Association, vol. 29(3), pages 51-70, December.
    6. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, January.
    7. Bates, Timothy, 2002. "Restricted access to markets characterizes women-owned businesses," Journal of Business Venturing, Elsevier, vol. 17(4), pages 313-324, July.
    8. 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.
    9. 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.
    10. 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.

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