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Neighbourhoods, economic incentives and post compulsory education choices

  • Lindvall, Lars

    ()

    (Department of Economics, Uppsala University)

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    There are large differences in income and education levels, unemployment and ethnic composition between neighbourhoods. An interesting question is whether a neighbourhood’s characteristics affect the behaviour of its residents. This paper investigates neighbourhood effects on youths’ post primary education choice. Besides including usual variables the paper also includes neighbourhood specific economic incentives. Estimating linear probability models as well as multinomial logit models using Swedish register data, covering the county of Stockholm and the years 1988–1992, I find that both neighbourhood characteristics and economic incentives affect the choice. For the latter the results are quite clear although the size of the effect is small: an increase in the expected income of an alternative increases the probability that this alternative is chosen. For the neighbourhood variables the results differ to some extent depending on the model. The proportion of individuals with at most compulsory education in a neighbourhood does however seem to have a negative effect on applying for a university preparatory programme. The proportion of immigrants in a neighbourhood tend to have a positive effect on immigrants’ probability to apply for a university preparatory programme.

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    File URL: http://www.ifau.se/upload/pdf/se/2009/wp09-11.pdf
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    Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2009:11.

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    Length: 39 pages
    Date of creation: 17 May 2009
    Date of revision:
    Handle: RePEc:hhs:ifauwp:2009_011
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    1. Kathryn Wilson & Barbara Wolfe & Robert Haveman, 2005. "The Role of Expectations in Adolescent Schooling Choices: Do Youths Respond to Economic Incentives?," Economic Inquiry, Western Economic Association International, vol. 43(3), pages 467-492, July.
    2. Daniel Aaronson, 1996. "Using sibling data to estimate the impact of neighborhoods on children' s educational outcomes," Working Paper Series, Macroeconomic Issues WP-96-19, Federal Reserve Bank of Chicago.
    3. Åslund, Olof & Edin, Per-Anders & Fredriksson, Peter, 2001. "Ethnic Enclaves and the Economic Success of Immigrants - Evidence from a Natural Experiment," CEPR Discussion Papers 2729, C.E.P.R. Discussion Papers.
    4. Donna Ginther & Robert Haveman & Barbara Wolfe, 2000. "Neighborhood Attributes as Determinants of Children's Outcomes: How Robust Are the Relationships?," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 603-642.
    5. Comay, Yochanan & Melnik, A & Pollatschek, M A, 1973. "The Option Value of Education and the Optimal Path for Investment in Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 421-35, June.
    6. Vartanian, Thomas P. & Gleason, Philip M., 1999. "Do neighborhood conditions affect high school dropout and college graduation rates?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 28(1), pages 21-41.
    7. Horrace, William C. & Oaxaca, Ronald L., 2006. "Results on the bias and inconsistency of ordinary least squares for the linear probability model," Economics Letters, Elsevier, vol. 90(3), pages 321-327, March.
    8. Philip Oreopoulos, 2003. "The Long-Run Consequences Of Living In A Poor Neighborhood," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1533-1575, November.
    9. Robert Haveman & Barbara Wolfe, 1995. "The Determinants of Children's Attainments: A Review of Methods and Findings," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1829-1878, December.
    10. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
    11. Cardak, B.A. & McDonald, J.T., 2000. "Neighborhood Effects, Preference Heterogeneity and Immigrant Educational Attainment," Papers 2001-03, Tasmania - Department of Economics.
    12. Barbara Wolfe & Robert Haveman & Karen Pence & Jonathan Schwabish, 2007. "Do youth nonmarital childbearing choices reflect income and relationship expectations?," Journal of Population Economics, Springer, vol. 20(1), pages 73-100, February.
    13. Kathryn Wilson, 2001. "The Determinants of Educational Attainment: Modeling and Estimating the Human Capital Model and Education Production Functions," Southern Economic Journal, Southern Economic Association, vol. 67(3), pages 518-551, January.
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