American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Affirmative Action Exemptions and Capacity Constrained Firms
American Economic Journal: Economic Policy
vol. 9,
no. 3, August 2017
(pp. 377–407)
Abstract
This paper studies how affirmative action exemptions in public procurement can improve efficiency and government expenditures without harming disadvantaged business enterprise (DBE) utilization. I examine a unique program employed by the Iowa Department of Transportation, where prior to 2013 prime contractors were allowed an exemption from a project's affirmative action requirement if their history of DBE utilization was sufficiently high. I find that prime contractors use the exemption to smooth demands on capacity constrained DBEs, building a history of utilization during low demand periods and exploiting the resulting exemption during high demand. The exemption policy was unexpectedly eliminated in 2013, which I exploit to evaluate its effect on DBE utilization and procurement costs. I find that average DBE utilization was unchanged and bids rose on affirmative action contracts.Citation
Marion, Justin. 2017. "Affirmative Action Exemptions and Capacity Constrained Firms." American Economic Journal: Economic Policy, 9 (3): 377–407. DOI: 10.1257/pol.20150498Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- H76 State and Local Government: Other Expenditure Categories
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J16 Economics of Gender; Non-labor Discrimination
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