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Are there any studies that show that "Affirmative Action" (an action or policy favoring those who tend to suffer from discrimination, especially in relation to employment or education) hurts the economy?

Based on personal research/reasoning, I believe that "Affirmative Action" could hurt the economy, but I would like to do more research on the subject. Any links to (credible) studies showing that "Affirmative Action" hurts the economy would be greatly appreciated.

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    $\begingroup$ 1) What about links to credible studies showing that "Affirmative Action" is beneficial for the economy? Are they of interest? 2) Perhaps it would be helpful if you included in the question a definition/description of what "Affirmative Action" is. $\endgroup$ – Alecos Papadopoulos Aug 1 '15 at 14:42
  • $\begingroup$ @AlecosPapadopoulos 1) No. I knew that if I asked for articles showing the positives and negatives of Affirmative Action that I would be flooded with articles biased toward Affirmative Action. I am specifically trying to find articles supporting a politically unpopular view. 2) Will do! $\endgroup$ – Mathematician Aug 1 '15 at 18:20
  • $\begingroup$ Waiting for 2), thanks. As for 1), by "articles" I guess you mean theoretical economic papers that model how some specific realization of "Affirmative Action" can "hurt the economy" (remains to be defined what that means), and/or empirical/econometric papers that, after defining and measuring "Affirmative Action", use data to show that it has "hurt the economy". Am I understanding/describing your request correctly? $\endgroup$ – Alecos Papadopoulos Aug 1 '15 at 18:57
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    $\begingroup$ Are you looking for theoretical or empirical studies? For the theoretical part, there is a famous chapter on fair employment practices in Milton Friedman's Capitalism and Freedom. He opposes affirmative actions both in principle (because it restricts contractual freedom) and because it inflicts economic costs to employers. For more extensive and recent reviews, have you looked at Roland Fryer's and Glenn Loury's papers? $\endgroup$ – Oliv Aug 2 '15 at 10:07
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    $\begingroup$ @Mathematician You're welcome! It would be nice if you could share the results of your search, so please don't hesitate to answer your own question if you find something relevant. $\endgroup$ – Oliv Aug 7 '15 at 13:56
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Very interesting question. Those at cafehayek.com seem to dislike it a lot but don't really back it up which is disappointing. At first glance, it is very easy to see how affirmative action could hurt the economy, and construction a model to show this would also be pretty straight forward.

  • See here(paywalll) (Moro & Norman, 2003). There is pretty strong intuition both ways so I'd think that any valuable study would be empirical. This article looks pretty light empirically but does support the view you are looking for and provides a useful model.

We consider a model of endogenous human capital formation with competitively determined wages. Discrimination is sustainable in equilibrium in the presence of two distinguishable, but ex ante identical groups of workers. An affirmative action policy consisting of a quota may ‘fail’ in the sense that there still may be equilibria where groups are treated differently. However, the incentives to invest for agents in the discriminated group are improved by affirmative action if the initial equilibrium is the most discriminatory equilibrium in the model without the policy. The welfare effects are ambiguous. It is possible that the policy makes the intended beneficiaries worse off: even if the starting point is the most discriminatory equilibrium the expected payoff may decrease for all agents in the target group.

Most work in this area suggests that the effects are welfare ambiguous/slightly positive.

  • This Paper (Leonard, 1990) discusses the idea that affirmative action does not work.

To borrow from the conclusion:

Direct tests of the impact of affirmative action on productivity find no significant evidence of a productivity decline. However, since the productivty estimates are not measured with great precision, strong policy conclusions based on this particular result should be resisted.

  • This paper (Long, 2004) looks at the impact of the removal of affirmative action on college applications.

This paper evaluates the behavioral response of college-bound high school seniors to changes in college affirmative action admissions policies during the late 1990s. After the elimination of affirmative action in California and Texas, the gap between the numbers of SAT score reports sent by non-minority and minority students to in-state, public colleges significantly widened... predicts a large decrease in the number of reports sent by minority students and a large increase in non-minority score reports sent to top-tier public colleges as a result of changes in the students’ probabilities of acceptance.

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