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Incentive Effects of Affirmative Action

This article illustrates with a formal economic model a concern often raised by critics of affirmative action—that the policy may discourage its beneficiaries from acquiring work skills. Ironically, this can happen for reasons analogous to those evoked to explain why discrimination may discourage its victims from investing in skills: when skilled workers are less likely to succeed, fewer find it worthwhile to become skilled. Similarly, when unskilled workers are more likely to succeed, fewer deem it necessary to become skilled. Discrimination can lead to the former situation; affirmative action can lead to the latter. The analysis shows how affirmative action can lead employers to patronize minority workers, that is, hold them to a different standard. This patronization can have the effect of making skill acquisition less beneficial for minority workers. The labor market conditions under which this counterproductive effect of affirmative action is most likely are identified.