Abstract
School segregation is a widespread issue in cities around the world. This paper examines the impact of affirmative action policies, commonly used in centralized school choice programs, on both segregation and efficiency. Using a large market model, we demonstrate that minority reserves—which guarantee seats for minority students—are an effective tool for reducing segregation. Under certain conditions, minority reserves also increase the number of students matched to their top-choice schools, thereby improving efficiency. However, expanding minority reserves can lead to more students being placed in less desirable schools. These theoretical predictions are supported by simulations based on data from school choice programs in Chile.