Title:

Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment

Abstract:

Pre-College human capital investment occurs within a competitive environment and depends on market incentives created  by Affirmative Action (AA) in college admissions. These policies affect mechanisms for rank-order allocation of college seats, and alter the relative competition between blacks and whites. We conduct a field experiment designed to mimic important competitive aspects of investment prior to the college market. We pay students based on relative performance on a national mathematics exam in order to test the incentive effects of AA. Consistent with theory, AA increases average study effort and exam performance for disadvantaged groups targeted by the policy, by mitigating so-called "discouragement effects." The experimental evidence suggests that AA can both promote greater equality of market outcomes and narrow achievement gaps at the same time.