An Estimable Model of Production Interactions in Endogenous Networks

Michele Pellizzari, Giacomo De Giorgi and Rodríguez Barraquer, Tomás
Authors registered in the RePEc Author Service: Tomás Rodríguez

No 15461, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a model where forward-looking agents first decide to form links with each other and, then, engage in a production activity jointly with their linked peers. Exogenous linking opportunities facilitate the creation of network connections and the return to productive effort varies with the personal attributes of the connected agents. We apply our model to a purposely built dataset of college students containing information on the endogeneous networks of study partners linked with administrative records on the students’ characteristics and academic performance. Identification relies upon the random assignment of students to classrooms, which generates exogenous opportunities for socialisation. Using the estimated structural parameters, we investigate the implications of two counterfactual experiments, one where students are streamed into classes by ability and one with single-sex classes.

Keywords: Networks; Production; Estimation; Counterfactual; Education (search for similar items in EconPapers)
JEL-codes: C15 C63 C73 D85 E23 I23 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-mac and nep-net
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