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College Diversity and Investment Incentives

Author

Listed:
  • Thomas Gall
  • Patrick Legros
  • Andrew Newman

    () (Boston University)

Abstract

We study the aggregate economic effects of diversity policies such as affirmative action in college admission. If agents are constrained in the side payments they can make, the free market allocation displays excessive segregation relative to the first-best. Affirmative action policies can restore diversity within colleges but also affect incentives to invest in pre-college scholastic achievement. Affirmative action policies that are achievement-based can increase aggregate investment and income, reduce inequality, and increase aggregate welfare relative to the free market outcome. They may also be more effective than decentralized policies such as cross-subsidization of students by colleges.

Suggested Citation

  • Thomas Gall & Patrick Legros & Andrew Newman, 2015. "College Diversity and Investment Incentives," Working Papers 2015-001, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2015-001
    Note: MIP
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Gall_Legros_Newman_2015_college-diversity-investment.pdf
    File Function: First version, December 2014
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    References listed on IDEAS

    as
    1. Thomas Gall & Patrick Legros & Andrew Newman, 2006. "The Timing of Education," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 427-435, 04-05.
    2. Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2009. "New Evidence about Brown v. Board of Education: The Complex Effects of School Racial Composition on Achievement," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 349-383, July.
    3. Fernanda Estevan & Thomas Gall; Patrick Legros; Andrew F. Newman, 2014. "College Admission and High School Integration," Working Papers, Department of Economics 2014_26, University of São Paulo (FEA-USP).
    4. Peter Arcidiacono & Esteban M. Aucejo & Hanming Fang & Kenneth I. Spenner, 2011. "Does affirmative action lead to mismatch? A new test and evidence," Quantitative Economics, Econometric Society, vol. 2(3), pages 303-333, November.
    5. Kaneko, Mamoru & Wooders, Myrna Holtz, 1986. "The core of a game with a continuum of players and finite coalitions: The model and some results," Mathematical Social Sciences, Elsevier, vol. 12(2), pages 105-137, October.
    6. Tolga Yuret, 2008. "An Economic Analysis of Color-Blind Affirmative Action," Journal of Law, Economics, and Organization, Oxford University Press, vol. 24(2), pages 319-355, October.
    7. Durlauf, Steven N, 1996. "A Theory of Persistent Income Inequality," Journal of Economic Growth, Springer, vol. 1(1), pages 75-93, March.
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    11. Durlauf, S.N., 1996. "Associational Redistribution: A Defense," Working papers 9613, Wisconsin Madison - Social Systems.
    12. Roland Fryer & Glenn C. Loury & Tolga Yuret, 2003. "Color-Blind Affirmative Action," NBER Working Papers 10103, National Bureau of Economic Research, Inc.
    13. Kaneko, Mamoru & Wooders, Myrna Holtz, 1989. "The core of a continuum economy with widespread externalities and finite coalitions: From finite to continuum economies," Journal of Economic Theory, Elsevier, vol. 49(1), pages 135-168, October.
    14. Eleanor Wiske Dillon & Jeffrey Andrew Smith, 2013. "The Determinants of Mismatch Between Students and Colleges," NBER Working Papers 19286, National Bureau of Economic Research, Inc.
    15. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-133, February.
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    Cited by:

    1. Fernanda Estevan & Thomas Gall, Louis-Philippe Morin, 2016. "Redistribution without distortion: Evidence from an affirmative action program at a large Brazilian university," Working Papers, Department of Economics 2016_07, University of São Paulo (FEA-USP), revised 14 Apr 2016.

    More about this item

    Keywords

    matching; misallocation; nontransferable utility; multidimensional attributes; Affirmative Action; segregation; education;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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