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

Listed author(s):
  • 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)

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.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 15 (1996)
Issue (Month): 2 ()
Pages: 202-226

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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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  1. Dennis E. Black, 1983. "Effectiveness of the Mandatory Minority Business Set-Aside Contracting Goals," Evaluation Review, , vol. 7(3), pages 321-336, June.
  2. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-243, May.
  3. 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.
  4. 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.
  5. 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.
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