How costly is diversity? Affirmative action in light of gender differences in competitiveness

Abstract

Affirmative action is often criticized for causing reverse discrimination and lowering thequalifications of those hired under the policy. However the magnitude of such adverse effectsdepends on whether the best suited candidate is hired absent the policy. Indeed affirmative actionmay compensate for the distortion discrimination imposes on the selection of candidates. Thispaper asks whether affirmative action can have a similar corrective impact when qualifiedindividuals fail to apply for a job. We evaluate the effect of introducing a gender quota in anenvironment where high performing women fail to enter competitions they can win. We showthat guaranteeing women equal representation among winners increases their entry. The responseexceeds that predicted by the change in probability of winning, and is in part driven by womenbeing more willing to compete against other women. The consequences are substantial as theboost in supply essentially eliminates the anticipated costs of the policy.