A Big Fish in a Small Pond: Ability Rank and Human Capital Investment
Benjamin Elsner () and
Ingo Isphording ()
No 9121, IZA Discussion Papers from Institute for the Study of Labor (IZA)
We study the impact of a student's ordinal rank in a high school cohort on educational attainment several years later. To identify a causal effect, we compare multiple cohorts within the same school, exploiting idiosyncratic variation in cohort composition. We find that a student's ordinal rank significantly affects educational outcomes later in life. If two students with the same ability have a different rank in their respective cohort, the higher-ranked student is significantly more likely to finish high school, attend college, and complete a 4-year college degree. These results suggest that low-ranked students under-invest in their human capital even if they have a high ability compared to most students of the same age. Exploring potential channels, we find that students with a higher rank have higher expectations about their future career, a higher perceived intelligence, and receive more support from their teachers.
Keywords: ordinal rank; peer effects; educational attainment; human capital (search for similar items in EconPapers)
JEL-codes: I21 I23 J24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-hrm, nep-lma and nep-ure
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Published in: Journal of Labor Economics, 2017, 35(3), 787-828
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Journal Article: A Big Fish in a Small Pond: Ability Rank and Human Capital Investment (2017)
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