Beyond the Average: Peer Heterogeneity and Intergenerational Transmission of Education

45 Pages Posted: 30 Dec 2014

See all articles by Tanika Chakraborty

Tanika Chakraborty

Indian Institute of Technology (IIT), Kanpur

Olga Nottmeyer

IZA Institute of Labor Economics; German Institute for Economic Research (DIW Berlin)

Simone Schüller

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; Institute for the Study of Labor (IZA); FBK-IRVAPP

Klaus F. Zimmermann

Global Labor Organization (GLO); UNU-MERIT; Maastricht University, Department of Economics; Free University Berlin; University of Bonn; Centre for Economic Policy Research (CEPR); Journal of Population Economics

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: education, ethnic capital, Germany, immigrant, peer effects, policy experiment

JEL Classification: R23, J15, I21

Suggested Citation

Chakraborty, Tanika and Nottmeyer, Olga and Schüller, Simone and Zimmermann, Klaus F., Beyond the Average: Peer Heterogeneity and Intergenerational Transmission of Education. IZA Discussion Paper No. 8695, Available at SSRN: https://ssrn.com/abstract=2543889

Tanika Chakraborty (Contact Author)

Indian Institute of Technology (IIT), Kanpur ( email )

Kharagpur
Kanpur, Uttar Pradesh 208016
India

Olga Nottmeyer

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Simone Schüller

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

FBK-IRVAPP ( email )

via Santa Croce 77
Trento, 38122
Italy

Klaus F. Zimmermann

Global Labor Organization (GLO) ( email )

Bonn
Germany

HOME PAGE: http://https://glabor.org/

UNU-MERIT ( email )

Keizer Karelplein 19
Maastricht, 6211TC
Netherlands

Maastricht University, Department of Economics ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

University of Bonn

Postfach 2220
Bonn, D-53012
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Journal of Population Economics

Tiergartenstr. 17
D-69121 Heidelberg
Germany

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