Educational Inequality and Reservation Policy in Developing Markets
研究低收入学生因缺钱无法投资教育而降低学习动力，导致教育不平等；分析发展中市场为弱势群体预留大学名额的政策，发现小规模转移可提升整体福利，但大规模转移可能适得其反。
Educational inequality undermines the pivotal role of education in increasing the ability of the poor to move up the income ladder. This paper investigates educational inequality that arises from low-income students’ lack of monetary resources that higher-income students invest in education. We show low-income students’ inability to make monetary investments in education reduces their incentive to study and contributes to educational inequality. In the context of developing markets, we study implications of a reservation policy that aims to reduce inequality by reserving some college seats for students of the disadvantaged group. The policy essentially transfers college seats from the advantaged student group to the disadvantaged student group and as a result increases the welfare of students from the disadvantaged group. In some cases, the seat transfer also improves the welfare of higher-income students. We show such a transfer, if small, can enhance overall student welfare in developing markets. However, a large transfer may reduce overall student welfare. Finally, we show the welfare-maximizing transfer is usually smaller than inequality-minimizing transfer of seats. This paper was accepted by Dmitri Kuksov, marketing. Funding: J. Ni was partially supported by the National Natural Science of China Grant [71832010]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.00249 .