College Diversity and Investment Incentives

Thomas Gall, Patrick Legros and Andrew Newman ()
Additional contact information
Andrew Newman: Boston University

No 2015-001, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: We study 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.

Keywords: matching; misallocation; nontransferable utility; multidimensional attributes; Affirmative Action; segregation; education (search for similar items in EconPapers)
JEL-codes: C78 I28 J78 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-lma, nep-mfd and nep-upt
Note: MIP
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Citations: View citations in EconPapers (3)

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http://humcap.uchicago.edu/RePEc/hka/wpaper/Gall_L ... rsity-investment.pdf First version, December 2014 (application/pdf)

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Working Paper: College Diversity and Investment Incentives (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hka:wpaper:2015-001

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