We explore the dynamics of group inequality when segregation of social networks places the initially less affluent group at a disadvantage in acquiring human capital. Extending Loury (1977), we demonstrate that (i) group differences in economic success can persist across generations in the...

We explore the combined effect of segregation in social networks, peer effects, and the relative size of a historically disadvantaged group on the incentives to invest in market-rewarded skills and the dynamics of inequality between social groups. We identify conditions under which group...

Despite declining group inequality and the rapid expansion of the black middle class in the United States, major urban centers with significant black populations continue to exhibit extreme racial separation. Using a theoretical framework in which individuals care about both the affluence and...