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Peer Effects, Cooperation and Competition in Human Capital Formation

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  • Román Andrés Zárate

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Abstract

Economic literature has identified positive effects of peer abilities on individual achievement. However, the intuitive arguments supporting this evidence are not clear. This article presents a specific mechanism: cooperation and competition among group members; more precisely, the presence of positive and negative externalities in human capital accumulation. First, I develop an economic model that incorporates both kinds of externalities and shows the existence of an optimal level of competition between group members that maximizes human capital accumulation. Then, using data from PISA (2000) and an empirical strategy that controls for potential endogeneity issues, I find empirical evidence supporting the main results of the theoretical model. Namely, I find robust evidence of a non-linear effect of competition on academic performance. These results are consistent with the proposed model and the presence of positivetechnological externalities in educational production functions.

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Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 009795.

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Length: 40
Date of creation: 11 Jun 2012
Date of revision:
Handle: RePEc:col:000089:009795

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Keywords: Peer effects; Cooperation; Competition; PISA;

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  1. Christiane Schwieren & Doris Weichselbaumer, 2008. "Does competition enhance performance or cheating? A laboratory experiment," Economics working papers 2008-01, Department of Economics, Johannes Kepler University Linz, Austria.
  2. Giorgio Brunello & Maria De Paola & Vincenzo Scoppa, 2010. "Peer Effects In Higher Education: Does The Field Of Study Matter?," Economic Inquiry, Western Economic Association International, vol. 48(3), pages 621-634, 07.
  3. Foster, Gigi, 2006. "It's not your peers, and it's not your friends: Some progress toward understanding the educational peer effect mechanism," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1455-1475, September.
  4. Becker, William E. & Rosen, Sherwin, 1992. "The learning effect of assessment and evaluation in high school," Economics of Education Review, Elsevier, vol. 11(2), pages 107-118, June.
  5. Antonio Filippin & Massimiliano Bratti & Daniele Checchi, 2008. "Should you compete or cooperate with your schoolmates?," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1074, Universitá degli Studi di Milano.
  6. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," NBER Working Papers 10269, National Bureau of Economic Research, Inc.
  7. M. Bigoni & M. Fort & M. Nardotto & T. Reggiani, 2011. "Teams or Tournaments? A Field Experiment on Cooperation and Competition in Academic Achievement," Working Papers wp752, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-64, October.
  9. Daniel Mejía & Marc St-Pierre, 2007. "Human capital formation, inequality, and competition for jobs," DOCUMENTOS CEDE 004105, UNIVERSIDAD DE LOS ANDES-CEDE.
  10. Esther Duflo & Pascaline Dupas & Michael Kremer, 2008. "Peer Effects, Teacher Incentives, and the Impact of Tracking: Evidence from a Randomized Evaluation in Kenya," NBER Working Papers 14475, National Bureau of Economic Research, Inc.
  11. Steven Yamarik, 2007. "Does Cooperative Learning Improve Student Learning Outcomes?," The Journal of Economic Education, Taylor & Francis Journals, vol. 38(3), pages 259-277, July.
  12. Dan T. Rosenbaum, 2000. "Ability, Educational Ranks, and Labor Market Trends: The Effects of Shifts in the Skill Composition of Educational Groups," JCPR Working Papers 146, Northwestern University/University of Chicago Joint Center for Poverty Research.
  13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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