Affirmative Action in Centralized College Admissions Systems

We study the consequences of affirmative action in college admissions. We develop an empirical framework that distinguishes the effects on marginally benefited and displaced students from the overall effects of the policy. The overall effects include equilibrium reallocations as benefited students leave seats that others fill and displaced students take seats elsewhere, displacing others in turn. We apply this framework to a large-scale policy in Brazil that required all federal institutions to reserve half their seats for racially and socioeconomically disadvantaged applicants. Exploiting admissions cutoffs, we find that marginally benefited targeted students attend and graduate from higher-quality programs. Their graduation gains are about twice the losses of marginally displaced non-targeted students, reflecting targeted students’ weaker outside options. To evaluate the overall effects, we estimate a model of degree choices and potential outcomes. Among all reallocated students, benefited students still gain nearly twice what displaced students lose, but equilibrium reallocations make the policy displace about 30% more students than it benefits. Non-targeted students’ losses therefore offset about two-thirds of targeted students’ graduation gains, leaving a modest net gain across all students.