As children reach adolescence, peer interactions become increasingly central to their development, whereas the direct influence of parents wanes. Nevertheless, parents continue to play an important role through their impact on children’s peer selection. We study interactions of parenting style and peer effects in a structural model where children’s skill accumulation depends on both parental inputs and peers, and where parents can affect the peer group by restricting who their children can interact with. We estimate the model and show that it is able to capture empirical patterns regarding the interaction of peer characteristics, skill accumulation, and parental behavior in the Add Health data. We use the estimated model for policy simulations. We find that interventions that move children to a more favorable environment (e.g., busing) lose impact when they are scaled up, because parents’ equilibrium responses push against successful integration with the new peer group.
Friday, February 7, 2020
3:30pm – 5:00pm
Small reception to follow in Room 426. All are invited to attend.