Informal networks and education choice: A dynamic macro model

Alessia Cafferata, Davide Radi and Daniele Ravasi

Economic Modelling, 2025, vol. 151, issue C

Abstract: This study examines the temporal evolution of the share of educated workers within a discrete-time macroeconomic model. The decision to pursue education is modeled endogenously through a modified replicator equation that captures the influence of homophily, social learning, and herding behavior. Building on the literature on informal networks , this adaptive process addresses labor market information asymmetries, which can be partially alleviated through personal connections. In particular, when a young agent’s parental network includes both educated and uneducated individuals, it enhances the agent’s ability to evaluate the returns to education. By incorporating an intergenerational productivity spillover, we are able to model how this rigidity affects both educational attainment and economic growth.

Keywords: Intergenerational mobility; Education; Herding behavior; Evolutionary dynamics; Networks (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325001695

DOI: 10.1016/j.econmod.2025.107174

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