Social Learning, Neighborhood Effects, and Investment in Human Capital: Evidence from Green-Revolution India uri icon

abstract

  • This paper empirically identifies social learning and neighborhood effects in schooling investments in a new technology regime. Social learning implies that learning is most efficient when observed heterogeneity in schooling is greatest. The estimates of learning-investment rule, from farm household panel data at the onset of the Green Revolution in India, show that (i) agents learn about schooling returns from income realizations of their neighbors, and (ii) the speed of learning is high when the variation of schooling is large. Thus, schooling distribution of the parents' generation in a community has externalities to schooling investments in children. Simulations show that the variations in schooling within and across communities generate variations in child enrollment rate and average household income. (C) 2006 Elsevier B.V. All rights reserved.

publication date

  • 2007
  • 2007
  • 2007