Valuing Identity

Roland Fryer () and Glenn Loury

No 16568, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for positions in a hierarchy. The problem of designing an efficient policy to raise the status in this competition of a disadvantaged identity group is considered. We show that: (i) when agent identity is fully visible and contractible (sightedness), efficient policy grants preferred access to positions, but offers no direct assistance for acquiring skills; and, (ii) when identity is not contractible (blindness), efficient policy provides universal subsidies when the fraction of the disadvantaged group at the development margin is larger then their mean (across positions) share at the assignment margin.

JEL-codes: H2 J08 J15 (search for similar items in EconPapers)
Date: 2010-12
Note: LE LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Valuing Diversity Roland G. Fryer Jr. and Glenn C. Loury Journal of Political Economy Vol. 121, No. 4 (August 2013), pp. 747-774

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