Isolating Peer Effects in the Returns to College Selectivity
83 Pages Posted: 10 Sep 2019
Date Written: September 3, 2019
This paper asks how a student’s classmates affect her returns to college. We exploit a “tracking” admission system at a selective Colombian university that led to large differences in mean classmate ability for students in the same programs. In a regression discontinuity design, we find that students in higher-ability classes were more likely to fail courses and drop out, and had lower earnings one decade later. Testable predictions from a human capital model with peer externalities show that individuals learned less in more able classrooms. Our findings suggest that exposure to higher-ability college peers can harm an individual’s career trajectory.
Keywords: College Selectivity, Peer Effects, Returns to Education
JEL Classification: I23, I26, J24
Suggested Citation: Suggested Citation