The Impact of City Contracting Set-Asides on Black Self-Employment and Employment
Aaron K. Chatterji, Duke University, Kenneth Y. Chay, Brown University, and Robert W. Fairlie, University of California, Santa Cruz
In the 1980s, many U.S. cities initiated programs reserving a proportion of government contracts for minority-owned businesses. The staggered introduction of these set-aside programs is used to estimate their impacts on the self-employment and employment rates of African-American men. Black business ownership rates increased significantly after program initiation, with the black-white gap falling three percentage points. The evidence that the racial gap in employment also fell is less clear as it is depends on assumptions about the continuation of pre-existing trends. The black gains were concentrated in industries heavily affected by set-asides and mostly benefited the better educated.
Employment, Unemployment, and the Labor Market, Race and Ethnicity