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The Long-Term Impacts of Mixing the Rich and Poor: Evidence from Conscript Dorms

Author

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  • Elias Einiö

Abstract

To what extent is economic success determined by with whom individuals interact socially? We tackle this question by exploiting a large-scale natural experiment in the Finnish conscription. Our research design is based on the alphabetization of dorms, which is shown to induce as good as random variation in peer composition. Dormmates from high-income families have a positive impact on earnings, with the largest effect among individuals from high-income families. For them, a one standard deviation increase in dormmates' parental income increases long-term earnings by 5.7 percent. The results support labor market networks among the rich as the key mechanism.

Suggested Citation

  • Elias Einiö, 2026. "The Long-Term Impacts of Mixing the Rich and Poor: Evidence from Conscript Dorms," American Economic Journal: Applied Economics, American Economic Association, vol. 18(2), pages 177-209, April.
    • Handle: RePEc:aea:aejapp:v:18:y:2026:i:2:p:177-209
    DOI: 10.1257/app.20240173
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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