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The persistent effect of temporary affirmative action (Miller 2014)

Citation

Miller, C. (2014). The persistent effect of temporary affirmative action (Unpublished job market paper). Cambridge, MA: MIT Department of Economics.

Highlights

    • The study’s objective was to determine the effect of affirmative action requirements for federal contractors through Executive Order 11246 on African American employment shares at the establishment level.
    • The study used establishment transitions between federal contractor and non-contractor status to pinpoint the effects of affirmative action regulation using multiple regression analysis. The author based his analysis on EEO-1 Employer Information Report files from 1978–2004.
    • The study found that federal contractors subject to the affirmative action Executive Order increased African American employment share by 0.13–0.15 percentage points each year relative to non-contractors not subject to the Order.
    • The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to affirmative action requirements under Executive Order 11246, but other factors might also have contributed.

Intervention Examined

Executive Order 11246

Features of the Intervention

Affirmative action Executive Order 11246, signed by President Lyndon B. Johnson in 1965, reinforced prohibitions in the Civil Rights Act of 1964 and earlier executive orders against discrimination based on race, color, religion, and national origin; subsequent Orders and revisions have added sex (1967) and sexual orientation and gender identity (2014) as protected classes. Order 11246 required the federal government and federal contractors with 50 or more employees or $50,000 in contracts to develop written affirmative action plans and ensure equal opportunities for all workers. The Order authorized the Secretary of Labor to establish the Office of Federal Contract Compliance Programs to enforce federal contractors’ compliance.

Features of the Study

The analysis used data from EEO-1 Employer Information Report files from 1978–2004. These are establishment-level data from annual workforce surveys that employers meeting certain size requirements must submit to the Equal Employment Opportunity Commission (EEOC) and the Department of Labor’s Office of Federal Contract Compliance Programs. Before 1982, all private employers with at least 50 employees and federal contractors with at least 25 employees were required to file EEO-1 reports; since then, the size requirements for EEO-1 filing have risen to 100 employees for private employers and 50 employees for federal contractors. The sample included establishments in 204 U.S. metropolitan areas where the African American share of the working population was at least 5 percent at some point during the analysis period. Depending on the specific analysis, the number of federal contractor establishments in the sample ranged from 2,530 to 6,066.

The author examined transitions into and out of federal contractor status to pinpoint the initial effects of regulation under affirmative action and their persistence over time. The study estimated difference-in-differences regression models that compared yearly changes in African American employment share at federal contractors before and after they became contractors (or before and after they stopped being contractors) with changes at establishments that never became contractors from 1978 to 2004. The models controlled for establishment size, the number of years before and after the establishment became a contractor, fixed establishment effects, and fixed annual U.S. Census geographic region effects.

Findings

    • The African American employment share at federal contractors subject to the affirmative action Executive Order 11246 increased significantly more each year by 0.13–0.15 percentage points relative to the share at non-contractors not subject to the Order.
    • Statistically significant gains in the African American employment share persisted even after establishments transitioned out of federal contractor status.

Considerations for Interpreting the Findings

Because establishments choose to become federal contractors, those who find the affirmative action regulations easier to comply with could be more likely to become or continue to be federal contractors. The author addressed this issue by including controls for fixed and time-varying differences between contractors and non-contractors. The author also confirmed that between establishments that do and do not ultimately become federal contractors, there is no significant difference in the share of African American employees before becoming a federal contractor.

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to affirmative action requirements under Executive Order 11246, but other factors might also have contributed.

Reviewed by CLEAR

December 2015

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