Identification of Peer Effects Using Group Size Variation

25 Pages Posted: 12 Oct 2006

See all articles by Laurent Davezies

Laurent Davezies

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Xavier D'Haultfœuille

Center for Research in Economics and Statistics (CREST)

Denis Fougère

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Center for Scientific Research (CNRS); IZA Institute of Labor Economics

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Date Written: September 2006

Abstract

This paper considers the semiparametric identification of endogenous and exogenous peer effects based on group size variation. We show that Lee (2006)'s linear-in-means model is generically identified, even when all members of the group are not observed. While unnecessary in general, homoskedasticity may be required in special cases to recover all parameters. Extensions to asymmetric responses to peers and binary outcomes are also considered. Once more, most parameters are semiparametrically identified under weak conditions. However, recovering all of them requires more stringent assumptions. Eventually, we bring theoretical evidence that the model is more adapted to small groups.

Keywords: social interactions, linear-in-means model, semiparametric identification

JEL Classification: C14, C21, C25

Suggested Citation

Davezies, Laurent and d'Haultfoeuille, Xavier and Fougere, Denis, Identification of Peer Effects Using Group Size Variation (September 2006). IZA Discussion Paper No. 2324, Available at SSRN: https://ssrn.com/abstract=936916

Laurent Davezies (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

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Malakoff Cedex, 1 92245
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Xavier D'Haultfoeuille

Center for Research in Economics and Statistics (CREST) ( email )

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France

Denis Fougere

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

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National Center for Scientific Research (CNRS)

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IZA Institute of Labor Economics

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