Peer Effects


While it is widely believed that family and social networks can influence important life decisions, identifying causal effects is notoriously difficult. This paper presents causal evidence from three countries that the educational trajectories of older siblings can significantly influence the college and major choice of younger siblings. We exploit institutional features of centralized college assignment systems in Chile, Croatia, and Sweden to generate quasi-random variation in the educational paths taken by older siblings. Using a regression discontinuity design, we show that younger siblings in each country are significantly more likely to apply and enroll in the same college and major that their older sibling was assigned to. These results persist for siblings far apart in age who are unlikely to attend higher education at the same time. We propose three broad classes of mechanisms that can explain why the trajectory of an older sibling can causally affect the college and major choice of a younger sibling. We find that spillovers are stronger when older siblings enroll and are successful in majors that, on average, have higher scoring peers, lower dropout rates and higher earnings from graduates. The evidence presented shows that the decisions, and even random luck, of your close family members and peer network, can have significant effects on important life decisions such as the choice of specialization in higher education. The results also suggest that college access programs such as affirmative action, may have important spillover effects through family and social networks.

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Neilson, C., Altmejd, A., Barrios-Fernandez, A., Drlje, M., & Kovac, D. (2020). Siblings’ Spillover Effects on College and Major Choice: Evidence from Chile, Croatia and Sweden. Retrieved from (Original work published January 2020)
Working Papers