Association for Public Policy Analysis & Management

This paper analyzes Affirmative Action in higher education to investigate if making access to college easier can incentivize  students from the underprivileged target group to complete high school. In 2006, the central government in India passed the legislation for a 27 percent quota for a disadvantaged caste-group - the Other Backward Classes (OBC) - in all central government funded colleges. Exploiting this policy change using a difference-in difference framework reveals that the college enrollment rate for the OBC increased by 5.1 percentage points more than the other disadvantaged caste group not targeted by the policy (Scheduled Castes). Moreover, there is a significant differential increase of 4.1 percentage points in high-school completion rate for the OBC as compared to the Scheduled Castes. These impacts are heterogeneous based on sex and place of residence. Dividing the OBC households by education of the household head as proxy for socioeconomic status (SES), I find that the policy impact on college enrollments is larger for OBC students from lower SES strata. Hence not only did this policy have a significant effect on the targeted group (OBC), it was also most effective among households of lower socioeconomic status. It enabled students from households without a history of higher education to realize the opportunity of a college education. Moreover, it motivated more students to complete high-school that not only gives them a chance to compete for college admissions but also makes the wage premium for having completed high-school accessible.