Working Paper: NBER ID: w14948
Authors: Giacomo De Giorgi; Michele Pellizzari; Silvia Redaelli
Abstract: In this paper we investigate whether peers' behavior influences the choice of college major, thus contributing to the mismatch of skills in the labor market. Using a newly constructed dataset, we are able to identify the endogenous effect of peers on such decisions through a novel identification strategy that solves the common econometric problems of studies of social interactions. Results show that, indeed, one is more likely to choose a major when many of her peers make the same choice. We also provide evidence on skills mismatch in terms of entry wages and occupation. We find that peers can divert students from majors in which they have a relative ability advantage, with adverse consequences on academic performance, entry wages and job satisfaction.
Keywords: Peer effects; Education; Labor market; College major; Skills mismatch
JEL Codes: I21; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| peer behavior (C92) | major decision (D79) |
| major decision (D79) | academic performance (D29) |
| major decision (D79) | entry wages (J31) |
| major decision (D79) | job satisfaction (J28) |