Peer Effects and the Promise of Social Mobility: A Model of Human Capital Investment

Chris Bidner

No 2010-09, Discussion Papers from School of Economics, The University of New South Wales

Abstract: I analyze a model of human capital development in the presence of peer effects. Parents invest in their child, and this investment conveys a positive externality upon the child’s peers. Parents also acquire wealth, which i) finances consumption, and ii) determines a child’s peer group. I show how the freedom to compete for desirable peers exacerbates the natural underinvestment problem. The analysis thereby produces a general equilibrium framework in which the inefficiencies displayed in a rat-race interact with those stressed in the multi-tasking literature. I consider an extension in which both wealth and parental investment are observed with noise.

Keywords: Peer Effects; Premarital Investment; Matching; Human Capital (search for similar items in EconPapers)
JEL-codes: C78 D13 D62 D82 J24 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-05
New Economics Papers: this item is included in nep-hrm and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://research.economics.unsw.edu.au/RePEc/papers/2010-09.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable: Back-end server is at capacity

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:swe:wpaper:2010-09

Access Statistics for this paper

More papers in Discussion Papers from School of Economics, The University of New South Wales Contact information at EDIRC.
Bibliographic data for series maintained by Hongyi Li ().