Working Paper: NBER ID: w27337
Authors: Adriana Lleras-Muney; Matthew Miller; Shuyang Sheng; Veronica T. Sovero
Abstract: We investigate the returns to adolescent friendships on earnings in adulthood using data from the National Longitudinal Study of Adolescent to Adult Health. Because both education and friendships are jointly determined in adolescence, OLS estimates of their returns are likely biased. We implement a novel procedure to obtain bounds on the causal returns to friendships: we assume that the returns to schooling range from 5 to 15% (based on prior literature), and instrument for friendships using similarity in age among peers. Having one more friend in adolescence increases earnings between 7 and 14%, substantially more than OLS estimates would suggest.
Keywords: social networks; adolescent friendships; earnings; causal returns
JEL Codes: I20; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| friendships (Z13) | social skills (Z13) |
| social skills (Z13) | friendships (Z13) |
| adolescent friendships (C92) | adult earnings (J31) |
| having one more friend in adolescence (C92) | adult earnings (J31) |
| education and friendships (I24) | OLS estimates (L00) |
| friendships (Z13) | returns to education (I26) |