AFFIRMATIVE ACTION AND THE UTILIZATION OF MINORITY- AND WOMEN-OWNED BUSINESSES IN HIGHWAY PROCUREMENT

Authors

  • JUSTIN MARION

    1. Marion: Economics Department, University of California, Santa Cruz, 401 Engineering 2, Santa Cruz, CA 95064. Phone 831-459-2848, Fax 831-459-5077, E-mail marion@ucsc.edu.
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    • I appreciate the helpful comments of two anonymous referees, Rob Fairlie and the participants at the 2007 WEAI Annual Conference in Seattle. Parita Suaphan provided research assistance. Funding from the UC Institute for Labor and Employment and UNC Kenan Flagler Institute is gratefully acknowledged.


Abstract

The Federal Highway Administration (FHWA) mandates states' use of affirmative action when awarding federally funded road construction projects. Here I document the effectiveness of this program in increasing purchases from disadvantaged business enterprises (DBEs). Higher goals for the utilization of DBEs, both across states over time and across projects within California, is associated with a greater share of contract dollars awarded to DBEs. This effect is concentrated among minority-owned firms and is stronger when goals are more likely to be binding and in states with an apparently stricter enforcement regime. (JEL J15, H57)

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