Affirmative Action in the Presence of a Creamy Layer: Identity or Class Based?

We analyze affirmative action in the presence of income heterogeneity, with the target group containing a creamy layer, as well as poorer members. We find that a move from identity to class-based affirmative action would affect the creamy layer and the poorer members of the target group differently. While it would help the poorer members of the target group, it would hurt the creamy layer, as well as the non-target group. Further, temporary affirmative action need not have a permanent effect, since removing identity-based affirmative action may harm the poorer members of the target group. Thus either removing identity-based affirmative action, or switching to a class-based affirmative action is likely to be politically difficult.