Be As Careful Of The Company You Keep As Of The Books You Read. Peer Effects In Education And On The Labor Market

Giacomo DeGiorgi
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Giacomo DeGiorgi: Department of Economics, Stanford University
Authors registered in the RePEc Author Service: Giacomo De Giorgi

No 07-054, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: In this paper we present a novel identification strategy for the analysis of social interactions and we shed light on the effect of peer behavior in the choice of college major. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions. Results show that, indeed, students are more likely to choose a major when many of thier peers make the same choice. We also provide evidence on skills mismatch, entry wages and occupation. Peer effects are found to be strong enough to divert students from majors in which they have a relative ability advantage. When this happens, students have worse academic performances, earn lower entry wages and are more likely to end up in a job that does not match their skills and expectations.

Keywords: Social interactions; peer effects; identi?cation; mismatch (search for similar items in EconPapers)
JEL-codes: I21 J0 (search for similar items in EconPapers)
Date: 2008-08
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Working Paper: Be as Careful of the Company You Keep as of the Books You Read: Peer Effects in Education and on the Labor Market (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:07-054

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