References & Citations
Economics > Econometrics
Title: Party On: The Labor Market Returns to Social Networks in Adolescence
(Submitted on 17 Oct 2022 (v1), revised 22 Aug 2023 (this version, v3), latest version 26 Mar 2024 (v5))
Abstract: We investigate the returns to adolescent friendships on earnings in adulthood. Using data from the National Longitudinal Study of Adolescent to Adult Health, we document that individuals make investments to accumulate friends in addition to educational investments. Because both education and friendships are jointly determined in adolescence, OLS estimates of their returns are biased. To estimate the causal returns to friendships, we implement a novel procedure that assumes the returns to schooling range from 5 to 15% (as the literature has documented), and instrument for friendships using homophily (similarity) measures among peers to obtain bounds on the returns to friendships. We find that having one more friend in adolescence increases earnings between 7 and 14%, which is substantially larger than the OLS estimates: measurement error and omitted variables lead to significant downward bias.
Submission history
From: Shuyang Sheng [view email][v1] Mon, 17 Oct 2022 20:43:21 GMT (431kb,D)
[v2] Sat, 4 Mar 2023 13:12:56 GMT (496kb,D)
[v3] Tue, 22 Aug 2023 16:08:20 GMT (547kb,D)
[v4] Sun, 1 Oct 2023 06:12:41 GMT (451kb,D)
[v5] Tue, 26 Mar 2024 22:41:31 GMT (451kb,D)
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