Affirmative action and effort choice: An experimental investigation (WIDER Working Paper 2016/54)

We study the effect of affirmative action on effort in an experiment conducted in high schools in socioeconomically disadvantaged areas in Queensland, Australia. All participating schools have a large representation of indigenous Australians, a population group that is frequently targeted by affirmative action. Our participants perform a simple real-effort task in a competitive setting. Those ranked in the top third receive a high piece-rate payment and all the others receive a low payment. We introduce affirmative action by providing the lowest (bottom third) performers with a positive handicap increasing their chances to achieve the high payment target. Our findings show that the policy increases effort of those that it aims to favour, without discouraging effort of those who are indirectly penalized by affirmative action.