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Affirmative Action And Human Capital Investment: Theory And Evidence From A Randomized Field Experiment

Author

Listed:
  • Christopher Cotton

    (Queen's University)

  • Joseph P. Price

    (Brigham Young University)

Abstract

Pre-College human capital investment occurs within a competitive environment and depends on market incentives created by Affirmative Action (AA) in college admissions. These policies affect mechanisms for rank-order allocation of college seats, and alter the relative competition between blacks and whites. We present a theory of AA in university admissions, showing how the effects of AA on human capital investment differ by student ability and demographic group. We then conduct a field experiment designed to mimic important aspects of competitive investment prior to the college market. We pay students based on relative performance on a mathematics exam in order to test the incentive effects of AA, and track study efforts on an online mathematics website. Consistent with theory, AA increases average human capital investment and exam performance for the majority of disadvantaged students targeted by the policy, by mitigating so-called "discouragement effects." The experimental evidence suggests that AA can promote greater equality of market outcomes and narrow achievement gaps at the same time.

Suggested Citation

  • Christopher Cotton & Joseph P. Price, 2016. "Affirmative Action And Human Capital Investment: Theory And Evidence From A Randomized Field Experiment," Working Paper 1350, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1350
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1350.pdf
    File Function: First version 2016
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    References listed on IDEAS

    as
    1. Anat Bracha & Alma Cohen & Lynn Conell-Price, 2013. "Affirmative action and stereotype threat," Working Papers 13-14, Federal Reserve Bank of Boston.
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    3. Andrew Schotter & Keith Weigelt, 1992. "Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 511-539.
    4. Jessica S. Howell, 2010. "Assessing the Impact of Eliminating Affirmative Action in Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 113-166, January.
    5. Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
    6. Peter Arcidiacono, 2005. "Affirmative Action in Higher Education: How Do Admission and Financial Aid Rules Affect Future Earnings?," Econometrica, Econometric Society, vol. 73(5), pages 1477-1524, September.
    7. Calsamiglia, Caterina & Franke, Jörg & Rey-Biel, Pedro, 2013. "The incentive effects of affirmative action in a real-effort tournament," Journal of Public Economics, Elsevier, vol. 98(C), pages 15-31.
    8. Jesse Rothstein & Albert H. Yoon, 2007. "Affirmative Action in Law School Admissions: What Do Racial Preferences Do?," Working Papers 20, Princeton University, School of Public and International Affairs, Education Research Section..
    9. Cotton, Christopher & McIntyre, Frank & Price, Joseph, 2013. "Gender differences in repeated competition: Evidence from school math contests," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 52-66.
    10. Stacy Berg Dale & Alan B. Krueger, 2002. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1491-1527.
    11. Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 701-728, July.
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    Citations

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    Cited by:

    1. Guilherme Strifezzi Leal & Ã lvaro Choi, 2021. "Racial quotas in higher education and pre-college academic performance: Evidence from Brazil," UB School of Economics Working Papers 2021/411, University of Barcelona School of Economics.
    2. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.

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    More about this item

    Keywords

    Contest Theory; Human Capital; Study Effort; Field Experiment; College Admissions; Affirmative Action; All-Pay Auction;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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