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Multinomial Choice with Social Interactions: Occupations in Victorian London

Guerra, J-A and Mohnen, M (2017) Multinomial Choice with Social Interactions: Occupations in Victorian London. Working Paper. Universidad de los Andes, Facultad de Economía, Colombia.

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Abstract

This paper presents a multinomial choice model with social interactions in an incomplete network. Individuals form heterogenous rational expectations about the behavior of peers by taking into account their characteristics and the strength of their ties. We show the network conditions under which the endogenous and exogenous effects can be separately identified even in the presence of correlated effects at the group level. Conditions for unique equilibrium are established. We apply our empirical model to occupational choice in nineteenth century London. Thanks to a newly constructed dataset, we use ecclesiastical parish boundaries as proxies for social groups and geographic distances between individuals as measures of the strength of their ties. Our results show that endogenous network effects were important above and beyond correlated and exogenous effects. We uncover distinct impact by occupation type: peers in professional and industrial occupations have a positive impact on the likelihood of following a similar occupation while commercial have a negative one.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Social interactions, Heterogeneous beliefs, Multinomial choice, Occupational choice
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 11 Jan 2018 11:22
Last Modified: 11 Jan 2018 12:15
URI: http://repository.essex.ac.uk/id/eprint/20929

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