Redistribution and affirmative action

David Austen-Smith*, Michael Wallerstein

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

The paper develops an integrated political economy model in which individuals are distinguished by earning ability and an ascriptive characteristic, race. The policy space is a transfer payment to low-income workers financed by a flat tax on wages and an affirmative action constraint on firms' hiring decisions. The distribution of income and the policy are endogenous, with the latter being the outcome of a legislative bargaining game between three legislative blocs. The model provides support for the common claim that racial divisions reduce support for welfare expenditures, even when voters have color-blind preferences. We show that relatively advantaged members of both the majority and minority group benefit from the introduction of a second dimension of redistribution, while the less advantaged members of the majority are the principal losers.

Original languageEnglish (US)
Pages (from-to)1789-1823
Number of pages35
JournalJournal of Public Economics
Volume90
Issue number10-11
DOIs
StatePublished - Nov 1 2006

Keywords

  • Affirmative action
  • Fiscal redistribution
  • Legislative bargaining

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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