@techreport{NBERw12364,
 title = "A Model of Social Interactions and Endogenous Poverty Traps",
 author = "Roland G. Fryer, Jr.",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "12364",
 year = "2006",
 month = "July",
 URL = "http://www.nber.org/papers/w12364",
 abstract = {This paper develops a model of social interactions and endogenous poverty traps. The key idea is captured in a framework in which the likelihood of future social interactions with members of one%u2019s group is partly determined by group-specific investments made by individuals. I prove three main results. First, some individuals expected to make group-specific capital investments are worse off because their observed decision is used as a litmus test of group loyalty %u2014 creating a tradeoff between human capital and cooperation among the group. Second, there exist equilibria which exhibit bi-polar human capital investment behavior by individuals of similar ability. Third, as social mobility increases this bi-polarization increases. The models predictions are consistent with the bifurcation of distinctively black names in the mid-1960s, the erosion of black neighborhoods in the 1970s, accusations of %u2018acting white,%u2019 and the efficacy of certain programs designed to encourage human capital acquisition.},
}