Affirmative Action and Peer Effects: Evidence from Caste Based Reservation in General Education Colleges in India

Proponents of affirmative action policies in higher education argue that the beneficiaries of affirmative action could gain academically from positive peer effects, whereas critiques argue that they could fall behind due to competition with better prepared peers. I examine this hypothesis in the context of caste based affirmative action in college admissions in India. Admission to general education public colleges in India is strictly based on the results of the Senior Secondary School examinations. This rule generates quasi-random variation in the peer quality of the students admitted. I estimate peer effects using a unique data set that links admission data with the educational outcomes on college exit exams. I find that better average quality of the high caste students has a negative effect on the performance of the low caste students, and the peer quality of the low caste students also negatively affects high caste students, with more pronounced effects on high achievers. These findings suggest that integrated college environments may not necessarily benefit the intended social beneficiaries of affirmative action. JEL classification: O15, I21