Subsidies and taxes are widely used in labor markets to influence employment outcomes.

This paper uses a Kelso-Crawford framework to assess how transfers affect the welfare of

minority workers. We show that affirmative action policies, though well-intentioned, can

unintentionally harm this group. We establish that only uniform transfers—where all work-

ers in a group receive the same subsidy or tax across all firms—guarantee no welfare loss.

Building on this insight, we explore how transfers can be designed to achieve representation

goals for minority workers without reducing their welfare.

JEL Classification: C78; D47; D50; J20; J30

Keywords: Job matching; Salary; Transfer policy; Market equilibrium; Subsidy; Taxation;

Affirmative action