Affirmative Action, Equal Opportunity, or just tax the rich? Development, efficiency, and the pursuit of equity

Gautam Bose and Arghya Ghosh

No 2023-14, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We examine the efficiency properties of prominent equity policies in a general model of de- velopment that incorporates the Lewis model and the Kremer (O-ring) model as limiting cases. We find that reservation (quotas) is the most effective policy in an economy with low technological complexity. Our intuition is that production in such economies is less sensitive to variations in embodied skills. Training to equalize skills becomes more attractive as complexity increases. However, quotas never lose relevance. Tax-transfers supersede the other measures in highly complex and fiscally mature economies. These findings provide a step towards a more informed and robust policy.

Pages: 31 pages
Date: 2023-12
New Economics Papers: this item is included in nep-pbe
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Working Paper: Affirmative Action, Equal Opportunity, or just tax the rich? Development, efficiency, and the pursuit of equity (2022)
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