Social background in school attainment and job market

This paper studies how social background a¤ects schooling attainment and job opportunities from a theoretical perspective. We analyse the interaction between a school and an employer when students attend school and then go to the job market. Students differ in ability and belong to different social groups. Our results suggest that the employer makes use of social background in the recruitment decisions: this favours advantaged students, as they are more likely to have high ability. In turn, the school optimally provides disadvantaged students with less teaching than advantaged students, given the same level of ability.