Description:
This paper combines detailed geographic information and individual educational records in Chile to provide causal evidence that close neighbors significantly influence enrollment in university. I exploit the quasi-random variation generated by student loans eligibility rules and find that potential applicants are significantly more likely to attend and complete university when their closest neighbor—defined as the closest individual applying to university one year before—becomes eligible for a student loan and enrolls in university. These results highlight the importance of social influences on university enrollment and suggest that financial aid and university access policies may have important spillover effects. (JEL I22, I23, I28, O15, R23)