The Role of Social Networks and Peer Effects in Education Transmission
UAB - CODE; Universite de la Mediterranee - Centre de la Vieille Charite
affiliation not provided to SSRN
Stockholm University; Research Institute of Industrial Economics (IUI); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. DP8932
We propose a dynastic model in which individuals are born in an educated or uneducated environment that they inherit from their parents. We study the role of social networks on the correlation in the parent-child educational status independent of any parent-child interaction. We show that the network reduces the intergenerational correlation, promotes social mobility and increases the average education level in the population. We also show that a planner that encourages social mobility also reduces social welfare, hence facing a trade off between these two objectives. When individuals choose the optimal level of social mobility, those born in an uneducated environment always want to leave their environment while the reverse occurs for individuals born in an educated environment.
Number of Pages in PDF File: 39
Keywords: education, intergenerational correlation, Social mobility, strong and weak ties
JEL Classification: I24, J13, Z13working papers series
Date posted: May 25, 2012
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