An Aspiring Friend Is a Friend Indeed: On the Mechanisms Behind Peer Influences on Human Capital Accumulation

Applied Seminar

Jessica Gagete Miranda

University of Milano-Bicocca

25-Oct-2023

Seminario 3 – 14:30

This paper combines novel data on Brazilian students’ networks with administrative data to investigate friends’ influence on the process of human capital accumulation. The employed methodology first models friendship formation based on students’ unobserved social ability and random interaction opportunities and then uses the attributes of predicted friends of friends as instrumental variables for friends’ outcomes. The results show that an extra friend graduating from high school increases the likelihood of students’ graduation by 6.62 percent. An in-depth analysis of the mechanism behind such effects underscores the role of aspirations as the primary driver of friends’ influence.