Ethnic clustering in schools and early career outcomes

This study examines the impact of ethnic clustering during compulsory schooling on the career paths of ethnic minority students. We observe whether students upon completing compulsory school join an academic track, a vocational education, a transition year or no further education. We show that the effect of foreign language peers depends on whether or not they speak the same foreign language as the observed student. A higher overall share of foreign language peers in a cohort increases the probability of these students entering vocational education at the expense of academic education. It also leads to lower projected earnings. Peers speaking the same foreign language as the student observed also increase the student’s chances of joining vocational education, but at the expense of a transition year. Looking at mechanisms, we provide evidence that foreign language peers affect language acquisition negatively, but can provide positive network effects.