The Effects of Affirmative Action Policies in University Admissions on Human Capital Development of Minority Children: A Test of the Expectations Hypothesis

Ronald C Caldwell, University of Kansas

It is well documented that minority children leave primary school with lower levels of acquired skill than do their white counterparts. The causes of this “skill gap”, however, are not well understood. This paper attempts to analyze one possible cause: the impact of a perceived lack of future opportunities on the human capital development of minority children. Using the CNLSY79 data, I take advantage of recent changes in affirmative action laws regarding university admissions in California and Texas as a natural experiment. I employ both difference-in-difference-in-difference and individual fixed effects methodologies to test for changes in achievement test scores among minority children between the ages of 7 and 14. The results show a significant drop in test scores among thirteen and fourteen year old African-Americans in the affected states relative to whites. These results suggest that negative expectations may play a role in the human capital development of African-American children.