QED Working Paper Number
1433

We develop a model in which many heterogeneous agents invest in human capital as they compete for better college admission slots or employment opportunities. The model provides theoretical predictions about how affirmative action or preferential treatment policies change the distribution of effort, human capital accumulation, and job/college slot allocations across different population groups. Our findings deliver two key insights. First, incentives to invest in human capital depends substantially on the strength of one's competition. Second, we find evidence of a counter-intuitive role for preferential treatment in promoting overall human capital development.

Author(s)
JEL Codes
Keywords
large contest
all-pay contest
all-pay auction
affirmative action
college admissions
field experiment
human capital
Working Paper