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Social Interactions and Schooling Decisions

Author

Listed:
  • Rafael Lalive

    (University of Lausanne, IEW, CESifo, IZA, and IFAU)

  • M. Alejandra Cattaneo

    (Swiss Coordination Center for Research in Education)

Abstract

The aim of this paper is to study whether a child's schooling choices are affected by the schooling choices of other children. Identification is based on a randomized targeted intervention that grants a cash subsidy conditional on school attendance to a subgroup of eligible children within small rural villages in Mexico (PROGRESA). This policy change spills over to ineligible children if social interactions are relevant. Results indicate that the eligible children tend to attend school more frequently, and the ineligible children acquire more schooling when the subsidy is introduced in their local village. Moreover, the overall effect of PROGRESA on eligible children is the sum of a direct effect due to cash transfers and an indirect effect due to changes in peer group schooling. Interestingly, the social interactions effect is almost as important as the direct effect. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Rafael Lalive & M. Alejandra Cattaneo, 2009. "Social Interactions and Schooling Decisions," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 457-477, August.
  • Handle: RePEc:tpr:restat:v:91:y:2009:i:3:p:457-477
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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