Bruce Wydick (*)
A rancorous debate continues to rage over the use of affirmative action policies in college admissions. This article uses a simple signaling model to evaluate the labor market impacts of four types of affirmative action admissions policies. Race-based preferential policies and policies guaranteeing admission based on high school academic rank may induce discrimination in labor markets when there exists strong heterogeneity in socioeconomic disadvantage within the underrepresented minority group. Under such conditions, it may also be difficult to realize ethnic diversity with disadvantage-based preferential policies. The article argues instead for affirmative action policies emphasizing intensive college preparation for targeted groups. (JEL C71, I21, J15, J24, J78)
In March 1961, President John F. Kennedy issued executive order number 10925, requiring employers contracting with the federal government to "take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to race, creed, color, or national origin." Several years after Kennedy's initial executive order, colleges also began using affirmative action policies in admissions, principally employing some level of race-based preferential policies. Most proponents of affirmative action on college campuses viewed these as "second-best" policies in the face of both historical and present discrimination, but necessary in the short-term to encourage the participation of underrepresented groups in the mainstream economy. Nevertheless, with the possible exception of abortion, there is hardly an issue that has been as divisive in legal, public, and academic discourse as race-based affirmative action in college admissions.
Although race-based preferential policies remain strong at many colleges, important court decisions have restricted the use of such policies. The first of these was the Supreme Court's famous 1978 Bakke decision, which prohibited the use of quotas in college admissions but allowed race to continue to be used as one of many factors in the consideration of an applicant. In the Hopwood v. Texas decision of 1996, a federal court barred the University of Texas from using race as a factor in college admissions. The court decision forced the state to consider new policies, including the use of high school academic rank as a primary criterion for college admission, to maintain minority enrollment on its public university campuses.
The latter half of the 1990s also saw a number of states politically abandoning race-based affirmative action policies. In 1995, the University of California Regents passed a resolution against the use of race-based preferential admissions on all of its nine campuses. California voters endorsed this decision the following year by passing state Proposition 209, which banned race-based preferential policies in state contracting, hiring, and college admissions. Patterned after Proposition 209, Initiative 200 in the state of Washington ended preferences for minorities and women in state employment, public education, and contracting after its passage in the November 1998 state election. In February 2000, the independently elected cabinet of Florida voted to cease considering race and gender as factors in college admissions, a political move with solid popular backing within the state. The popular support behind these initiatives suggests that the coalition of interests that had previously supported race-based pref erential policies may have begun to dissolve.
Race-based preferential policies have also come under increasing attack in academic circles, although much research has presented policy conclusions that remain solidly in favor of such policies. Leonard (1989, 1990), for example, argues that race-based affirmative action policies brought significant gains in employment opportunities for African Americans during the 1970s, the period just after most affirmative action programs were in place. …