Beyond the Average: Peer Heterogeneity and Intergenerational Transmission of Education

Tanika Chakraborty (), Olga Nottmeyer (), Simone Schüller and Klaus Zimmermann ()
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Olga Nottmeyer: IZA

No 8695, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Estimating the effect of 'ethnic capital' on human capital investment decisions is complicated by the endogeneity of location choice of immigrants and the reflection problem. We exploit a rare immigrant settlement policy in Germany to identify the causal impact of parental peer-heterogeneity on the educational outcomes of their children. To identify the direction of peer effect we restrict to no-child-adult-peers who completed their education much before the children in our sample of interest. We find that children of low-educated parents benefit significantly from the presence of high-educated neighbors, with more pronounced effects in more polarized neighborhoods and significant gender heterogeneity. In contrast, we do not find any negative influence coming from the low-educated neighbors. Our estimates are robust to a range of flexible peer definitions. Overall, the findings suggest an increase in parental aspirations as the possible mechanism rather than a direct child-to-child peer effect.

Keywords: policy experiment; peer effects; immigrant; Germany; ethnic capital; education (search for similar items in EconPapers)
JEL-codes: I21 J15 R23 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-12
New Economics Papers: this item is included in nep-edu and nep-ure
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Published - revised version published in: Journal of Economic Behavior & Organization , 2019, 163, 551–569.

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