UC Davis

Human capital development is crucial for economic growth. Policymakers must understand the factors influencing human capital accumulation since they may vary by setting and sector. For example, micro-enterprise employees enhance their skills through on-the-job training or vocational programs. In educational institutions, family and school investments and peer interactions can affect human capital growth. Studies show that characteristics of peers, such as the gender of a classmate, can impact academic performance in elementary school. Other research has highlighted the importance of homophily in social network formation. Other research has highlighted the importance of homophily in social network formation. The latter is especially important in higher education settings, where individuals are mature and can thus engage in assortative matching based on characteristics such as shared identity. Thus, the ethnicity of peers may also play a crucial role in human capital development in settings of ethnic diversity.

The first essay in this dissertation quantifies high-ability and coethnic peer effects in higher education located in an ethnically diverse setting. While empirical research has documented the negative impact ethnic diversity has on several political and economic outcomes in Sub-Saharan Africa, including economic growth, political engagement, conflict, and contributions to public goods, we know relatively little about educational peer effects in such settings, which are generally characterized by high ethnic diversity and cross-ethnic mixing. This chapter studies the effect of coethnic and high-ability peers in student groups on academic outcomes at a large public university in Uganda, a country with pronounced ethnic heterogeneity and segregation. I link data on student-level university admissions with subsequent grades. Upon admission, dorm assignments are random conditional on gender, providing exogenous variation in peer group formation. On average, high-ability peers (irrespective of ethnicity) and coethnic peers (irrespective of ability) positively affect a student’s performance. Whereas the coethnic peer effect disappears by the year of graduation, the high-ability peer effect persists and even increases in magnitude over time. Lastly, I find that the effect of high-ability coethnic peers on performance is statistically indistinguishable from that of high-ability noncoethnic peers.

The second essay uses a causal forest algorithm to analyze heterogeneity in coethnic peer effects by estimating a grade dose-response function and treatment effects resulting from interethnic relations. Specifically, I train the causal model to optimize heterogeneity in students’ characteristics, including ethnic groups. This model predicts each student's conditional average treatment of coethnic share while doing data-driven sample splits to estimate heterogeneity. I find that coethnic peer effects are strongest for the largest ethnic group. This is the group that portrays more ethnic attachment than other ethnic groups in this setting. I also find the lowest effects for the second-largest group, which controls the central government and is thus likely to identify more with national identity than tribal identity.

The last essay uses a field experiment to examine how employers select employees for training and the demand for training from employees. Along with collaborators, I elicit employers’ beliefs about which of their employees it would be socially optimal to train and their preferences over which employees they choose to train. I then investigate whether employers’ selection of workers is individually rational. Finally, I measure employees’ self-selection into training and their alignment with employers’ selections. To ensure incentive compatibility of employer and employee choices, I provide employees from a sample of metalworking SMEs with free, high-quality skills training. Additionally, I conduct practical skills tests to measure employee metalworking skills before and after training. My analysis shows that owners perceive that training improves the quality of a trained worker. Yet, when offered the opportunity to choose an employee for training, they do not select workers whose quality would improve the most from training. Instead, they choose workers with ties to the firm, as those workers are perceived to be most profitable post-training but would not gain the most from training.