T HE effectiveness of affirmative action efforts has been a topic of some controversy and the literature is unclear about whether women and/or minorities benefit. One source of confusion is that in some models the economywide effect can be in a different direction than the effect upon regulated (or covered) individuals and firms. In a sense this is much like the minimum wage in that, while some individuals benefit, there is considerable controversy about the gains for target groups as a whole. What is more surprising, however, is that the affirmative action literature is unclear about whether the programs achieve their goals for firms which are covered. Again, in part, this confusion is theoretical for wage and hiring directives may provide conflicting incentives (Beller, 1978). Another difficulty is methodological in that measures of affirmative action activity tend to be indirect. 1 This last point, as we shall see, is especially true for studies of the Federal Contract Compliance Program. This paper assesses the effectiveness of the Federal Contract Compliance Program, which is administered by the Office of Federal Contract Compliance (OFCC) in improving opportunities for women. Rather than focusing on wage growth or the sex composition of occupations (or firms) as have all the previous studies, we examine quit rates. Quits are a useful measure of people's perceptions about their opportunities, and effective affirmative action programs may improve intra-firm opportunities for advancement. As a result, subject to some caveats discussed below, we expect that program effectiveness is captured by a reduction in quit rates from previous levels. In addition, this paper employs a more defensible measure of OFCC activities than is typical in most studies. Part I of the paper develops the model. Part II introduces the data and the specifications. The basic results are presented in part III. Two major conometric difficulties-whether the OFCC variables are actually proxies for other industry effects and the possible endogeneity of OFCC activity-are addressed in part IV, and the results are summarized in the final section.
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