College diversity and investment incentives
College diversity and investment incentives
This paper studies 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.
Centre for Economic Policy Research
Gall, Thomas
8df67f3d-fe3c-4a3f-8ce7-e2090557fcd4
Legros, Patrick
fbfef2ad-39d8-4949-98d5-65ea079ffd79
Newman, Andrew
a3394687-29e8-40c0-ac14-f66ac64e20d0
January 2015
Gall, Thomas
8df67f3d-fe3c-4a3f-8ce7-e2090557fcd4
Legros, Patrick
fbfef2ad-39d8-4949-98d5-65ea079ffd79
Newman, Andrew
a3394687-29e8-40c0-ac14-f66ac64e20d0
Gall, Thomas, Legros, Patrick and Newman, Andrew
(2015)
College diversity and investment incentives
London.
Centre for Economic Policy Research
57pp.
Record type:
Monograph
(Discussion Paper)
Abstract
This paper studies 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.
More information
Published date: January 2015
Organisations:
Economics
Identifiers
Local EPrints ID: 410435
URI: http://eprints.soton.ac.uk/id/eprint/410435
PURE UUID: 6b0a7fd2-7985-4000-bb9d-c88023e98762
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Date deposited: 08 Jun 2017 16:31
Last modified: 16 Mar 2024 04:14
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Contributors
Author:
Patrick Legros
Author:
Andrew Newman
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