Chapter 21. The Importance of Segregation, Discrimination, Peer Dynamics, and Identity in Explaining Trends in the Racial Achievement Gap

After decades of narrowing, the achievement gap between black and white school children widened in the 1990s a period when the labor market rewards for education were increasing. This presents an important puzzle for economists. In this chapter, I investigate the extent to which economic models of segregation, information-based discrimination, peer dynamics, and identity can explain this puzzle. Under a reasonable set of assumptions, models of peer dynamics and identity are consistent with the time-series data. Segregation and models of discrimination both contradict the trends in important ways.