抄録
In this paper, I clarify how peer effects, both positive and negative, can affect differences in the level of human capital between two types of students that have different preferences for education investment. First, our results show that education investment for each type of student increases with a rise in the population of its own type of students, but falls with an increase in the population of the other type of students. Second, when the degree of negative peer effects is sufficiently small, the difference in the level of human capital widens with an increase in the population of students with a high preference for education investment. Third, when the population of students with a low preference for education investment dominates that of students with a high preference, the increase in the degree of peer effects causes the difference in the level of human capital to become more divergent.
JEL Classification: I2, J24
