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Valuing Identity

Author Info

Listed author(s):
  • Roland G. Fryer, Jr.
  • Glenn Loury

Abstract

Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for positions in a hierarchy. The problem of designing an efficient policy to raise the status in this competition of a disadvantaged identity group is considered. We show that: (i) when agent identity is fully visible and contractible (sightedness), efficient policy grants preferred access to positions, but offers no direct assistance for acquiring skills; and, (ii) when identity is not contractible (blindness), efficient policy provides universal subsidies when the fraction of the disadvantaged group at the development margin is larger then their mean (across positions) share at the assignment margin.

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File URL: http://www.nber.org/papers/w16568.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16568.

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Length:
Date of creation: Dec 2010
Publication status: published as Valuing Diversity Roland G. Fryer Jr. and Glenn C. Loury Journal of Political Economy Vol. 121, No. 4 (August 2013), pp. 747-774
Handle: RePEc:nbr:nberwo:16568
Note: LE LS PE
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Keywords:

Find related papers by JEL classification:

  • H2 - Public Economics - - Taxation, Subsidies, and Revenue
  • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
  • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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  1. Moro, Andrea & Norman, Peter, 2003. "Affirmative action in a competitive economy," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 567-594, March.
  2. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
  3. Roland G. Fryer Jr. & Glenn C. Loury, 2005. "Affirmative Action and Its Mythology," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 147-162, Summer.
  4. Roland Fryer & Glenn Loury, 2005. "Affirmative action in winner-take-all markets," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 263-280, December.
  5. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
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Cited by:

  1. Yannis M. Ioannides, 2009. "Review: Scott E. Page The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies," Discussion Papers Series, Department of Economics, Tufts University 0729, Department of Economics, Tufts University.
  2. Durante, Ruben & Labartino, Giovanna & Perotti, Roberto, 2011. "Academic Dynasties: Decentralization and Familism in the Italian Academia," CEPR Discussion Papers 8645, C.E.P.R. Discussion Papers.
  3. Laurence Kranich, 2012. "A Simple Theoretical Argument for Affrmative Action," Discussion Papers 12-05, University at Albany, SUNY, Department of Economics.

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