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Party On: The Labor Market Returns to Social Networks in Adolescence

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  • Adriana Lleras-Muney
  • Matthew Miller
  • Shuyang Sheng
  • Veronica T. Sovero

Abstract

We investigate the returns to adolescent friendships on earnings in adulthood using data from the National Longitudinal Study of Adolescent to Adult Health. Because both education and friendships are jointly determined in adolescence, OLS estimates of their returns are likely biased. We implement a novel procedure to obtain bounds on the causal returns to friendships: we assume that the returns to schooling range from 5 to 15% (based on prior literature), and instrument for friendships using similarity in age among peers. Having one more friend in adolescence increases earnings between 7 and 14%, substantially more than OLS estimates would suggest.

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  • Adriana Lleras-Muney & Matthew Miller & Shuyang Sheng & Veronica T. Sovero, 2020. "Party On: The Labor Market Returns to Social Networks in Adolescence," NBER Working Papers 27337, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27337
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    Cited by:

    1. Bethencourt, Carlos & Santos-Torres, Daniel, 2023. "Gender-role identity in adolescence and women fertility in adulthood," MPRA Paper 116321, University Library of Munich, Germany.
    2. Valerie Michelman & Joseph Price & Seth D Zimmerman, 2023. "Old Boys’ Clubs and Upward Mobility Among the Educational Elite," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(2), pages 845-909.
    3. Iturra, Victor & Gallardo, Mauricio, 2022. "Schools, circumstances and inequality of opportunities in Chile," International Journal of Educational Development, Elsevier, vol. 95(C).
    4. Lépine, Andrea & Estevan, Fernanda, 2021. "Do ability peer effects matter for academic and labor market outcomes?," Labour Economics, Elsevier, vol. 71(C).

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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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