Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Understanding the nature of peer effects E02-V3
We study the impact of a student's ordinal rank in a high-school cohort on educational attainment several years later. To identify a causal effect, we compare multiple cohorts within the same school, exploiting exogenous variation in cohort composition. We nd that a student's ordinal rank in high-school signi cantly affects educational outcomes later in life. If two students with the same ability have a different rank in their respective cohort, the student with the higher rank is signi cantly more likely to nish high-school, to attend college, and to complete a 4-year college degree. These results suggest that students under- invest in their human capital if they have a low rank within their cohort even though they have a high ability compared to most students of the same age. Exploring potential channels, we nd that students with a higher rank have higher expectations about their future career, and feel that they are being treated more fairly by their teachers.