WILL AFFIRMATIVE-ACTION POLICIES ELIMINATE NEGATIVE STEREOTYPES

A key question concerning affirmative action is whether the labor-mark et gains it brings to minorities can continue without it becoming a pe rmanent fixture in the labor market. We argue that this depends on how the policy affects employers' beliefs about the productivity of minor ity workers. We study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job as signments. We prove that, even when identifiable groups are equally en dowed ex ante, affirmative action can bring about a situation in which employers (correctly) perceive the groups to be unequally productive, ex post.