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Multinomial Choice with Social Interactions: Occupations in Victorian London

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  • Jose-Alberto Guerra
  • Myra Mohnen

Abstract

We study the importance of social interactions on occupational choice in Victorian London using a multinomial choice model within an incomplete social network. Individuals form heterogeneous rational expectations about their peers' behaviors, taking into account their characteristics and the strength of their ties. We show the conditions under which the endogenous, exogenous, and correlated effects can be identified and a unique equilibrium can be established, Using a novel data set, we proxy social groups by parish boundaries and strength of ties by geographic distances, Our results show the importance of the endogenous effects and reveal distinct effects by occupation.

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  • Jose-Alberto Guerra & Myra Mohnen, 2022. "Multinomial Choice with Social Interactions: Occupations in Victorian London," The Review of Economics and Statistics, MIT Press, vol. 104(4), pages 736-747, October.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:4:p:736-747
    DOI: 10.1162/rest_a_00979
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    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913

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