Be as Careful of the Company You Keep as of the Books You Read: Peer Effects in Education and on the Labor Market

Giacomo De Giorgi, Michele Pellizzari and Silvia Redaelli

No 14948, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we investigate whether peers' behavior influences the choice of college major, thus contributing to the mismatch of skills in the labor market. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions through a novel identification strategy that solves the common econometric problems of studies of social interactions. Results show that, indeed, one is more likely to choose a major when many of her peers make the same choice. We also provide evidence on skills mismatch in terms of entry wages and occupation. We find that peers can divert students from majors in which they have a relative ability advantage, with adverse consequences on academic performance, entry wages and job satisfaction.

JEL-codes: I21 J0 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-lab and nep-ure
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Citations: View citations in EconPapers (13)

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Working Paper: Be As Careful Of The Company You Keep As Of The Books You Read. Peer Effects In Education And On The Labor Market (2008)
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