Working Paper: NBER ID: w10104
Authors: Roland G. Fryer Jr.; Glenn C. Loury
Abstract: This paper constructs a simple model of pair-wise tournament competition to investigate categorical redistribution in winner-take-all markets. We consider two forms of redistribution: category-sighted, where employers are allowed to use categorical information in pursuit of their redistributive goals; and category-blind, where they are not. It is shown that the equilibrium category-sighted redistribution scheme involves a constant handicap given to agents in the disadvantaged category. Equilibrium category-blind redistribution creates a unique semi-separating equilibrium in which a large pool of contestants exerts zero effort, and this pool is increasing in the aggressiveness of the redistribution goal.
Keywords: Categorical Redistribution; Winner-Take-All Markets; Tournament Theory; Affirmative Action
JEL Codes: D3; D8; J4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| category-sighted redistribution (D39) | constant handicap for disadvantaged agents (J14) |
| category-sighted redistribution (D39) | increased participation from disadvantaged groups (I24) |
| category-blind redistribution (D39) | unique semi-separating equilibrium (C62) |
| category-blind redistribution (D39) | significant pool of contestants exerts zero effort (D29) |
| aggressiveness of redistribution goal (P26) | size of low-effort pool (C55) |