Files
Abstract
This paper empirically identifies social learning and neighborhood effects in
schooling investments in a new technology regime. The estimates of learning-investment
rule from farm household panel data at the onset of the Green Revolution in India, show
that (1) agents learn about schooling returns from income realizations of their neighbors
and (2) schooling distribution of the parents’ generation in a community has externalities
to schooling investments in children that are consistent with social learning. Simulations
show that variations in schooling distributions within and across communities generate
through social learning substantial variations in child enrollment rate and average
household income. The results suggest that imperfect information hinders investment in
human capital.