This paper provides causal evidence that close neighbors signigicantly influence potential applicants' decision to attend university. I create a unique dataset combining detailed geographic information and individual educational records in Chile, and exploit the quasi-random variation generated by student loans eligibility rules. I find that potential applicants are significantly more likely to attend and complete university when their closest neighbor?defined as the closest individual applying to university one year before?becomes eligible for a student loan and enrolls in university. This increase in enrollment is mediated by an increase in the probability of taking the admission exam and applying to university. The closest neighbor typically lives 0.09 km away, and neighbors' influence decays with distance. My results highlight the importance of social influences for university enrollment decisions and suggest that financial aid and university access policies may have important spillover effects.

---

1 July 2022

---

American Economic Journal: Applied Economics 14(3) 2022

---

DOI: 10.1257/app.20200360

https://www.aeaweb.org/articles?id=10.1257/app.20200360&from=f

This Journal article is published under the centre's Education programme.