"Loury describes a cycle of tainted social information that has resulted in a self-replicating pattern of racial stereotypes that rationalize and sustain discrimination. His analysis shows how restrictions placed on Black development by stereotypical and stigmatizing thinking deny a segment of...

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...