Keywords: Social Mobility, Networks, labor markets, human capital
JEL codes: A14, J64, J31, J70
Abstract
We build a model where investments in human capital depend on the state of an individual's social network. We show that correlation patterns between parents' and children's human capital investment and income depend on the structure of their social network. Heavier reliance on the social network increases the correlation of human capital investments and income across generations and decreases the efficiency of their investment decisions.