Social policy gone bad educationally: Unintended peer effects from transferred students

Christos Genakos and Eleni Kyrkopoulou

Journal of Policy Modeling, 2026, vol. 48, issue 2, 398-428

Abstract: What is the impact of an increase of lower-ability students in a university class? We examine a natural experiment in which students from large, low-income families had the chance to transfer to academic programs at a local university. Multiple law changes meant that there was significant, quasi-random variability in the number of transferred students over time, which was orthogonal to the quality of receiving students. We create a novel dataset for the top economics department in Greece and show that the social policy had a negative educational impact by uniformly lowering recipient students' academic performance once the proportion of transferred students exceeded a certain threshold.

Keywords: Peer effects; Externalities; University education; Unintended consequences (search for similar items in EconPapers)
JEL-codes: H52 I2 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:48:y:2026:i:2:p:398-428

DOI: 10.1016/j.jpolmod.2026.01.003

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