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Be as Careful of the Company You Keep as of the Books You Read: Peer Effects in Education and on the Labor Market

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  • Giacomo De Giorgi
  • Michele Pellizzari
  • Silvia Redaelli

Abstract

In this paper we investigate whether peers' behavior influences the choice of college major, thus contributing to the mismatch of skills in the labor market. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions through a novel identification strategy that solves the common econometric problems of studies of social interactions. Results show that, indeed, one is more likely to choose a major when many of her peers make the same choice. We also provide evidence on skills mismatch in terms of entry wages and occupation. We find that peers can divert students from majors in which they have a relative ability advantage, with adverse consequences on academic performance, entry wages and job satisfaction.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14948.

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Date of creation: May 2009
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Handle: RePEc:nbr:nberwo:14948

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Citations

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Cited by:
  1. Onur Ozgur & Alberto Bisin, 2011. "Dynamic linear economies with social interactions," Levine's Working Paper Archive 786969000000000036, David K. Levine.
  2. Li, Tao & Han, Li & Zhang, Linxiu & Rozelle, Scott, 2014. "Encouraging classroom peer interactions: Evidence from Chinese migrant schools," Journal of Public Economics, Elsevier, vol. 111(C), pages 29-45.
  3. Lionel Perini, 2012. "Peer effects and school design: An analysis of efficiency and equity," IRENE Working Papers 12-01, IRENE Institute of Economic Research.
  4. Victor Lavy & Olmo Silva & Felix Weinhardt, 2009. "The Good, the Bad and the Average: Evidence on the Scale and Nature of Ability Peer Effects in Schools," NBER Working Papers 15600, National Bureau of Economic Research, Inc.
  5. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers 2009-31, University of Connecticut, Department of Economics.
  6. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.

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