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Be As Careful Of The Company You Keep As Of The Books You Read. Peer Effects In Education And On The Labor Market

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  • Giacomo DeGiorgi

    (Department of Economics, Stanford University)

Abstract

In this paper we present a novel identification strategy for the analysis of social interactions and we shed light on the effect of peer behavior in the choice of college major. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions. Results show that, indeed, students are more likely to choose a major when many of thier peers make the same choice. We also provide evidence on skills mismatch, entry wages and occupation. Peer effects are found to be strong enough to divert students from majors in which they have a relative ability advantage. When this happens, students have worse academic performances, earn lower entry wages and are more likely to end up in a job that does not match their skills and expectations.

Suggested Citation

  • Giacomo DeGiorgi, 2008. "Be As Careful Of The Company You Keep As Of The Books You Read. Peer Effects In Education And On The Labor Market," Discussion Papers 07-054, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:07-054
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    References listed on IDEAS

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    Cited by:

    1. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers 2009-31, University of Connecticut, Department of Economics.
    2. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    3. Moriarty, John & McVicar, Duncan & Higgins, Kathryn, 2016. "Cross-section and panel estimates of peer effects in early adolescent cannabis use: With a little help from my ‘friends once removed’," Social Science & Medicine, Elsevier, vol. 163(C), pages 37-44.
    4. Bartolj, Tjaša & Polanec, Sašo, 2012. "College major choice and ability: Why is general ability not enough?," Economics of Education Review, Elsevier, vol. 31(6), pages 996-1016.
    5. Li, Tao & Han, Li & Zhang, Linxiu & Rozelle, Scott, 2014. "Encouraging classroom peer interactions: Evidence from Chinese migrant schools," Journal of Public Economics, Elsevier, vol. 111(C), pages 29-45.
    6. Lionel Perini, 2012. "Peer effects and school design: An analysis of efficiency and equity," IRENE Working Papers 12-01, IRENE Institute of Economic Research.
    7. Victor Lavy & Olmo Silva & Felix Weinhardt, 2009. "The Good, the Bad and the Average: Evidence on the Scale and Nature of Ability Peer Effects in Schools," NBER Working Papers 15600, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Social interactions; peer effects; identi?cation; mismatch;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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