The coevolution of segregation, polarized beliefs and discrimination: the case of private versus state education

In this paper we analyze the coevolution of segregation into private and state schools, beliefs about the educational merits of di¤erent schools, and labour market discrimination. In a dynamic model, we characterize a necessary and sufficient condition on initial levels of segregation and beliefs under which full polarisation of beliefs and long run labour market discrimination are sustainable. The model suggests a new perspective on the long term e¤ects of different policy interventions, such as integration, school vouchers and policies that are directly targeted towards influencing beliefs.