Income-based affirmative action in college admissions

Luiz Brotherhood, Bernard Herskovic () and Joao Ramos ()
Additional contact information
Bernard Herskovic: UCLA Anderson, NBER
Joao Ramos: University of Southern California

No 2022/425, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: We study whether college admissions should implement quotas for lower-income applicants. We develop an overlapping-generations model and calibrate it to data from Brazil, where such a policy is widely implemented. In our model, parents choose how much to investin their child’s education, thereby increasing both human capital and likelihood of college admission. We find that, in the long run, the optimal income-based affirmative action increases welfare and aggregate output. It improves the pool of admitted students but distorts pre-college educational investments. The welfare-maximizing policy benefits lower- to middle-income applicants with income-based quotas, while higher-income applicants face fiercer competition in college admissions. The optimal policy reduces intergenerational persistence of earnings by 5.7% and makes nearly 80% of households better off.

Keywords: Affirmative action; intergenerational mobility; educational investment (search for similar items in EconPapers)
JEL-codes: E24 I2 J62 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2022
New Economics Papers: this item is included in nep-dge, nep-lab and nep-lam
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Citations: View citations in EconPapers (1)

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