Two studies examined the inductive potential of various social categories among 144 kindergarten, 2nd-, and 6th-grade Israeli children from 3 sectors: secular Jews, religious Jews, and Muslim Arabs. Study 1-wherein social categories were labeled-found that ethnic categories were the most inductively powerful, especially for religious Jewish children. Study 2-wherein no social category labels were provided-found no differences across sectors either in the inductive potential of ethnic categories or in children's capacity to visually recognize social categories. These results stress the importance of labels and cultural background in children's beliefs about social categories. The implications of these findings for accounts of the development of social essentialism are discussed.