In the 1980s, many US cities initiated programs reserving a proportion of government contracts for minority-owned businesses. The staggered introduction of these set-aside programs is used to estimate their impacts on the self-employment and employment rates of African American men. Black business ownership rates increased significantly after program initiation, with the black-white gap falling 3 percentage points. The evidence that the racial gap in employment also fell is less clear as it depends on assumptions about the continuation of preexisting trends. The black gains were concentrated in industries heavily affected by set-asides, and they mostly benefited the better educated.

Administrative data from a large and diverse community college are used to examine if underrepresented minority students benefit from taking courses with underrepresented minority instructors. To identify racial interactions, we estimate models that include both student and classroom fixed effects and focus on students with limited choice in courses. We find that the performance gap in terms of class dropout rates and grade performance between white and underrepresented minority students falls by 20 to 50 percent when taught by an underrepresented minority instructor. We also find these interactions affect longer-term outcomes such as subsequent course selection, retention, and degree completion.