Can Better Peers Signal Less Success? The Effect of Class Assignment on Career Investment

76 Pages Posted: 7 Mar 2018 Last revised: 8 Feb 2019

See all articles by Rafael P. Ribas

Rafael P. Ribas

University of Amsterdam - Finance Group

Breno Sampaio

Universidade Federal de Pernambuco

Giuseppe Trevisan

Universidade Federal de Pernambuco (UFPE) - Economics

Date Written: February 6, 2019

Abstract

Given a discontinuity in the class assignment of a flagship university in Brazil, we find that having better classmates increases the willingness to switch careers and reduces the likelihood of a prestigious occupation. Moreover, the more similar the peers are between classes, the higher these effects. This suggests that on average the effect of perceived rank dominates the effect of peer quality. Although peer quality contributes to human capital, the perceived rank alone sends a misleading signal, making similar students take distinct decisions. Higher parental education and stronger convictions about future earnings reduce the influence of this signal.

Keywords: Perceived Rank, Peer Quality, Career Change, College Graduation, Future Occupation, Earnings

JEL Classification: D84, D91, I21, I23, J24

Suggested Citation

Ribas, Rafael Perez and Sampaio, Breno and Trevisan, Giuseppe, Can Better Peers Signal Less Success? The Effect of Class Assignment on Career Investment (February 6, 2019). Available at SSRN: https://ssrn.com/abstract=3135824 or http://dx.doi.org/10.2139/ssrn.3135824

Rafael Perez Ribas (Contact Author)

University of Amsterdam - Finance Group ( email )

Plantage Muidergracht 12
Room M 3.06
Amsterdam, 1018 TV
Netherlands

HOME PAGE: http://https://sites.google.com/site/r4ribas/

Breno Sampaio

Universidade Federal de Pernambuco ( email )

United States

Giuseppe Trevisan

Universidade Federal de Pernambuco (UFPE) - Economics ( email )

United States

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