Multinomial Choice with Social Interactions: Occupations in Victorian London

José-Alberto Guerra; Myra Mohnen

doi:10.1162/rest_a_00979

Multinomial Choice with Social Interactions: Occupations in Victorian London

José-Alberto Guerra¹; Myra Mohnen²

¹ Universidad de Los Andes · ² University of Essex, University of Ottawa, and London School of Economics and Political Science

The Review of Economics and Statistics 2022

We study the importance of social interactions on occupational choice in Victorian London using a multinomial choice model within an incomplete social network. Individuals form heterogeneous rational expectations about their peers' behaviors, taking into account their characteristics and the strength of their ties. We show the conditions under which the endogenous, exogenous, and correlated effects can be identified and a unique equilibrium can be established, Using a novel data set, we proxy social groups by parish boundaries and strength of ties by geographic distances, Our results show the importance of the endogenous effects and reveal distinct effects by occupation.

DOI: 10.1162/rest_a_00979
Volume: 104 (4)
Pages: 736-747
Language: en
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