Promoting Educational Opportunities: Long-Run Implications of Affirmative Action in College Admissions
49 Pages Posted: 14 Jul 2015 Last revised: 26 Jul 2017
Date Written: January 24, 2017
This paper investigates the implications of affirmative action in college admissions for welfare, aggregate output, educational investment decisions and intergenerational persistence of earnings. We construct an overlapping-generations model in which parents choose how much to invest in their child's education, thereby increasing both human capital and likelihood of college admission. Affirmative action improves the pool of admitted students, although it changes incentives towards educational investments. We calibrate the model to quantify affirmative action long-run effects. We find that affirmative action targeting the bottom quintile of the income distribution is a powerful policy to reduce intergenerational persistence of earnings and improve welfare and aggregate output.
Keywords: Affirmative Action, Intergenerational Mobility, Educational Investment
JEL Classification: I2, E24, J62
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