Essays on Social Capital and Peer Effects

In Chapter 2, I employ the educational production function to identify the different effects of making a friend of the same gender and the opposite gender in a school network. Unlike other gender peer effects literature that only quantifies the causal effects of the proportion of girls in an aggregated level, such as other students in the same class, grade, or dorm, I study the gender of the five best friends nominated by the student. I address the endogeneity of friendship composition by employing a novel set of instrumental variables for the number of same-gender and opposite-gender friends. We find that having more friends, especially in the early accumulation stage, lowers the test scores. We also explore the mechanisms. In Chapter 3, I investigate the role of social learning in enrollment decisions for a public pension scheme. All else equal, if a qualified rural resident moves from a community where no other co- villagers participate in the new pension scheme to a community that is fully covered by the pension scheme, the probability of an individual enrolling by 0.541 percentage point. We use robustness checks to illustrate that the estimated peer effects are not driven by the common unobserved factors, but by social interactions. In Chapter 4, we use the survey data on Chinese middle students and the instrumental variables method to explore the different effects of making friends with the same gender and the opposite gender in a school network on mental health. The empirical results find that having a larger number of same-gender friends improves mental health but having a larger number of opposite-gender friends hurts mental health.