RIEB Discussion Paper Series No.2026-26

Title

Affirmative Action for the Ethnic Majority

Abstract

Affirmative action research has focused almost exclusively on policies targeting disadvantaged ethnic minorities, leaving open how such policies operate when they instead target the majority. We study Malaysia's New Economic Policy (NEP, 1971–1990), which granted the Malay majority preferential access to university admissions, public-sector employment, and corporate ownership. Using a cohort-based difference-in-differences design, we find that Malay cohorts exposed to the NEP acquired more years of education and were more likely to enter skilled occupations. Applying a structural model, we estimate that improved talent allocation during the NEP period raised GDP per capita by around 10%, driven primarily by reduced frictions in human capital accumulation rather than in the labor market. Our findings suggest that affirmative action targeting the majority can shift talent allocation, with implications for economic growth.

Keywords

Affirmative action; Ethnic majority; Talent allocation; Malaysia

Inquiries

Kotaro FUJISAKI
Department of Economics, University College London, UK
Junior Research Fellow, Research Institute for Economics & Business Administration, Kobe University

Rio IKEUCHI
Osaka School of International Public Policy, the University of Osaka