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Exposure to Inequality, Human Capital Investment, and Labor Market Outcomes

Bietenbeck, Jan LU ; Collins, Matthew LU ; Lundborg, Petter LU and Majlesi, Kaveh LU (2025) In IZA Discussion Papers
Abstract
We estimate the effects of exposure to income and wealth inequality during adolescence on long-term educational and labor market outcomes. Using detailed Swedish register data covering all students completing compulsory education between 1989 and 2013, we construct measures of inequality among students’ school-cohort peers and exploit variation between cohorts within schools to identify causal effects of inequality exposure. We find no evidence that exposure to inequality affects GPA, high school graduation, university enrollment, university completion, or income up to age 35. These null results are precisely estimated and robust to alternative measures of inequality, sample definitions, and specifications. Moreover, we find no evidence of... (More)
We estimate the effects of exposure to income and wealth inequality during adolescence on long-term educational and labor market outcomes. Using detailed Swedish register data covering all students completing compulsory education between 1989 and 2013, we construct measures of inequality among students’ school-cohort peers and exploit variation between cohorts within schools to identify causal effects of inequality exposure. We find no evidence that exposure to inequality affects GPA, high school graduation, university enrollment, university completion, or income up to age 35. These null results are precisely estimated and robust to alternative measures of inequality, sample definitions, and specifications. Moreover, we find no evidence of systematic heterogeneity by socioeconomic background. Taken together, these findings suggest that school integration policies mixing students from different socioeconomic backgrounds do not necessarily carry hidden long-run costs stemming from exposure to inequality. More broadly, they challenge the view that school-based exposure to peer inequality during adolescence is a causal driver of human capital accumulation or later-life mobility. (Less)
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author
; ; and
organization
publishing date
type
Working paper/Preprint
publication status
published
subject
in
IZA Discussion Papers
issue
18289
ISSN
2365-9793
language
English
LU publication?
yes
id
05d787c9-80b3-40d7-9e9f-a3dde3ef2245
alternative location
https://docs.iza.org/dp18289.pdf
date added to LUP
2026-03-06 08:55:15
date last changed
2026-03-06 14:10:04
@misc{05d787c9-80b3-40d7-9e9f-a3dde3ef2245,
  abstract     = {{We estimate the effects of exposure to income and wealth inequality during adolescence on long-term educational and labor market outcomes. Using detailed Swedish register data covering all students completing compulsory education between 1989 and 2013, we construct measures of inequality among students’ school-cohort peers and exploit variation between cohorts within schools to identify causal effects of inequality exposure. We find no evidence that exposure to inequality affects GPA, high school graduation, university enrollment, university completion, or income up to age 35. These null results are precisely estimated and robust to alternative measures of inequality, sample definitions, and specifications. Moreover, we find no evidence of systematic heterogeneity by socioeconomic background. Taken together, these findings suggest that school integration policies mixing students from different socioeconomic backgrounds do not necessarily carry hidden long-run costs stemming from exposure to inequality. More broadly, they challenge the view that school-based exposure to peer inequality during adolescence is a causal driver of human capital accumulation or later-life mobility.}},
  author       = {{Bietenbeck, Jan and Collins, Matthew and Lundborg, Petter and Majlesi, Kaveh}},
  issn         = {{2365-9793}},
  language     = {{eng}},
  note         = {{Working Paper}},
  number       = {{18289}},
  series       = {{IZA Discussion Papers}},
  title        = {{Exposure to Inequality, Human Capital Investment, and Labor Market Outcomes}},
  url          = {{https://docs.iza.org/dp18289.pdf}},
  year         = {{2025}},
}