We consider a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated differently in equilibrium due to informational externalities. Unlike earlier models of statistical discrimination, group inequalities may arise even if the...

This paper addresses a fundamental, yet unresolved, question: is statistical discrimination a market failure? I consider the problem for a utilitarian social planner who operates in an environment with imperfectly observable human capital investments. It is found that the informational problem...

We build a model of competitive pooling, which incorporates adverse selection and signalling into general equilibrium. Pools are characterized by their quantity limits on contributions. Households signal their reliability by choosing which pool to join. In equilibrium, pools with lower quantity...