We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the...

"We develop a model that analyzes the impact of residential neighborhood and parents' involvement in education on children's educational attainment and test it using the UK National Child Development Study. We find that the better the quality of the neighborhood, the higher the parents'...