Redistribution and affirmative action, Journal of Public Economics
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.
David Austen-Smith, Michael Wallerstein
Austen-Smith, David, and Michael Wallerstein. 2006. Redistribution and affirmative action. Journal of Public Economics. 90(10-11): 1789-1823.LINK