Thomas Gall, Patrick Legros, Andrew Newman
CEPR DP11910
Publication year: 2017

We investigate whether a policy that bases college admission on relative performance at high school could modify in the aggregate the degree of segregation in schools, by inducing some students to relocate to schools that offer weaker competition. In a theoretical model, such high school arbitrage will occur in equilibrium and typically result in desegregating high schools, if schools are segregated with regards to socio-economic characteristics that are correlated with academic performance and race. This is supported by empirical evidence on the effects of the Texas Top Ten Percent Law, indicating that a policy designed to support diversity at the college level in fact achieved high school desegregation, uninten- tionally generating incentives for some students to choose schools strate- gically.