Two of the nation’s largest university systems,

Texas, terminated their affirmative action admis-sions policies in the mid- to late 1990s. The affir-mative action policies had generally granted ad-mission to minority students who would not have been admitted if judged solely on academic crite-ria. In California, voters eliminated affirmative ac-tion policies with the passage of Proposition 209. In Texas, the court’s decision in Hopwood v. Texas ended the practice of race-based admissions preferences. The costs and benefits of affirmative action programs are notoriously unclear. In part, the programs exist to give minorities chances at better colleges and labor market experiences than they might otherwise have. They may also serve to fulfill a university’s mission of building a diverse learning environment. On the other hand, these ad-missions come at the expense of admitting stu-dents who may be better prepared academically. 263 Despite the controversy surrounding affirmative action, few academic studies have focused on the effects of affirmative action because it is often dif-ficult to distinguish which students were admitted under such a program. To assess the potential ef-fects of affirmative action policies, many studies use SAT scores or race to estimate which students were likely admitted through an affirmative action program. Loury and Garman (1993, 1995) find that students whose SAT scores are much lower than their university’s average SAT scores experience lower graduation rates and lower postgraduation earnings than they would had they been “matched” to a school at their ability level. However, Kane (1998) finds that black stu-dents who attend selective colleges have higher graduation rates and higher earnings than their similarly prepared peers at less selective colleges. His results diverge from those of Loury and Garman because Kane’s analysis takes account o