Econometrica: Sep 2005, Volume 73, Issue 5

Affirmative Action in Higher Education: How Do Admission and Financial Aid Rules Affect Future Earnings?

https://doi.org/10.1111/j.1468-0262.2005.00627.x
p. 1477-1524

Peter Arcidiacono

This paper addresses how changing the admission and financial aid rules at colleges affects future earnings. I estimate a structural model of the following decisions by individuals: where to submit applications, which school to attend, and what field to study. The model also includes decisions by schools as to which students to accept and how much financial aid to offer. Simulating how black educational choices would change were they to face the white admission and aid rules shows that race‐based advantages had little effect on earnings. However, removing race‐based advantages does affect black educational outcomes. In particular, removing advantages in admissions substantially decreases the number of black students at top‐tier schools, while removing advantages in financial aid causes a decrease in the number of blacks who attend college.

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Supplemental Material

Appendix: Additional Simulations for "Affirmative Action in Higher Education: How Do Admission and Financial Aid Rules Affect Future Earnings?"

This supplement to the paper ?Affirmative Action in Higher Education: How Do Admission and Financial Aid Rules Affect Future Earnings?? performs additional simulations regarding the effects of removing affirmative action in admissions and aid. The first examines the utility losses associated with removing black advantages in admissions and financial aid. The second makes the necessary assumptions such that it is possible to compare the discounted present value of lifetime earnings across different admissions and financial aid rules.

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