TY  - RPRT
        AU  - Portugal, Pedro
AU  - Reis, Hugo
AU  - Guimaraes, Paulo
AU  - Cardoso, Ana Rute
        TI  - Human Capital Spillovers and the External Returns to Education
        PY  - 2025/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17690
        UR  - https://www.iza.org/publications/dp17690
        AB  - We employ a regression model with spillover effects to show that the impact of peer quality on wages is quite large. We estimate that a 10 percent increase in peer quality implies a 2.1 percent increase in an individual's wage. In addition, we estimate the external returns to education using a novel identification strategy, which is strictly based on the peer effect channel, netting out the role of homophily and labor market sorting. We show that a one-year increase in the co-workers' education leads to a 0.58 percent increase in wages. We also show that both effects fade smoothly over time.
        KW  - wage distribution
KW  - human capital spillovers
KW  - external returns to education
KW  - peer effects
KW  - linked employer-employee data
KW  - high-dimensional fixed effects
KW  - workplace
KW  - job and occupation
        ER  -