Income-Based Affirmative Action in College Admissions

Abstract We study whether college admissions should implement quotas for lower-income applicants. develop an overlapping-generation model and calibrate it to data from Brazil, where such a policy is widely implemented. In our model, parents choose how much invest in their child’s education, thereby increasing both human capital likelihood of admission. find that, the long run, optimal income-based affirmative action increases welfare aggregate output. It improves pool admitted students, but distorts pre-college educational investments. The welfare-maximising benefits lower- middle-income applicants with quotas, while higher-income face fiercer competition admissions. reduces intergenerational persistence earnings by 5.7% makes nearly 80% households better off.