Can affirmative action policies be inefficiently persistent?

Philippe Jehiel () and Mathieu Leduc ()
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Mathieu Leduc: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: We develop a dynamic model where successive, decentralized policy makers must decide whether to implement affirmative action policies aimed at improving the performance of future generations of a targeted group. Employers do not perfectly observe if a worker benefited from affirmative action, but take that possibility into account, resulting in the devaluation of the worker's credentials and an associated feeling of injustice. We establish that, in equilibrium, affirmative action is implemented perpetually by benevolent policy makers, despite the feeling of injustice that eventually dominates the anticipated benefits. This contrasts with the first best, which requires affirmative action to be temporary.

Keywords: Affirmative action; General equilibrium; Loss aversion; Prospect theory; Moral hazard; Game theory; Tragedy of the commons (search for similar items in EconPapers)
Date: 2024-07
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Published in European Economic Review, 2024, 166, ⟨10.1016/j.euroecorev.2024.104754⟩

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Journal Article: Can affirmative action policies be inefficiently persistent? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-04630457

DOI: 10.1016/j.euroecorev.2024.104754

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