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Does Peer Motivation Impact Educational Investments?Evidence from DACABriana Ballis*September 24, 2020Latest version available at: https://brianaballis.weebly.comAbstractPreliminary and IncompleteDespite the significant influence that peer motivation is likely to have on educational investmentsduring high school, it is difficult to test empirically since exogenous changes in peer motivation arerarely observed. In this paper, I focus on the 2012 introduction of Deferred Action for ChildhoodArrivals (DACA) to study a setting in which peer motivation changed sharply for a subset of highschool students. DACA significantly increased the returns to schooling for undocumented youth,while leaving the returns for their peers unchanged. I find that DACA induced undocumented youthto invest more in their education, which also had positive spillover effects on ineligible students(those born in the US) who attended high school with high concentrations of DACA-eligible youth.* University of California, Merced. Department of Economics. Email: [email protected] thank Scott Carrell, Paco Martorell, Marianne Page, Marianne Bitler and Michal Kurlaender for many usefuldiscussions and suggestions. I would also like to thank Umut Ozek, as well as seminar participants at the Associationfor Education Finance and Policy (AEFP) 44nd annual conference; Western Economic Association International(WEAI) 94th annual conference, University of Hawaii at Manoa, Association for Public Policy Analysis & Management(APPAM) 41st Annual Conference; Fall Migration Research Cluster Workshop (UC Davis); Southern EconomicAssociation (SEA) 89th annual conference, and the UC Davis Alumni Conference. The conclusions of this research donot necessarily reflect the opinions or official position of Los Angeles Unified School District.

1IntroductionA substantive literature documents the importance of peer influences as an input to economicmobility (Sacerdote, 2011). However, the existing empirical literature mostly focuses on estimatingthe existence of peer effects rather than on the influence of specific peer attributes. For example, themotivation of one’s high school peers is believed to have a strong influence on long-run trajectories.Despite this belief, little is known about the exact degree to which peer motivation impacts schoolinginvestments during adolescence, if at all. Better understanding how specific attributes of peers,such as peer motivation, influence schooling investments, will likely yield important insights inunderstanding the root causes of educational underachievement and for corrective policy design.This paper uses the 2012 introduction of DACA as a natural experiment that changed thereturns to schooling among some high school students, without changing the incentives for others.Under DACA, if undocumented youth completed high school could receive temporary protectionfrom deportation and work authorization.1 Thus, DACA dramatically increased the incentives forundocumented youth to complete high school, likely increasing their academic motivation in theclassroom. Indeed, prior work suggests that the introduction of DACA significantly increased thelikelihood that undocumented youth completed high school, by as much as 7.5 percent (Kuka,Shenhav, & Shih, 2020). I also show that DACA led undocumented youth to invest more in theireducation, as measured by improvements in achievement. Studying the impact DACA had onUS-born students (who were not directly impacted by DACA) provides an ideal natural experimentto better understand the responsiveness of educational investments to changes in peer motivation.I use administrative data from Los Angeles Unified School District (LAUSD) togetherwith administrative data on DACA applicants from the U.S. Citizenship and Immigration Services(USCIS). These data allow me to create cleaner proxies for students’ legal status than have beenused in the past and reduces measurement error. Specifically, I combine information from the1 DACAalso required undocumented youth to meet specific age/date of arrival criteria and to have never committeda felony. Section 2 provides more detail on these other DACA-eligibility criteria.1

LAUSD on students’ country of birth and current zip-code of residence with the USCIS informationon DACA applications by zip code to determine each students’ likely eligibility. To identify thedirect impact of DACA on undocumented youth, I compare changes in educational outcomes offoreign-born students living in zip-codes with higher concentrations of DACA-eligible youth (whowere more likely to be undocumented) to those with lower concentrations (who were likely citizens),before and after the introduction of DACA. To identify the spillover effects of DACA, I comparechanges in the educational outcomes of US-born students in high schools with higher concentrationsof DACA-eligible peers to those in high schools with lower concentrations.I find that DACA led to significant increases in targeted students’ educational investments.High school graduation increased by 6 percent among youth who were likely undocumented. Theeffects are driven by males and students who were initially low achievers, whose likelihood ofgraduating increased by 10 percent and 12 percent, respectively. These groups are typically at risk ofdropping out of high school and would have been more likely to respond to DACA’s incentives. Themagnitude of this effect is similar to Kuka et al. (2020), who focus on a national sample. In addition,I find that DACA led to significant improvements in English Language Arts (ELA) achievement andGPA among undocumented youth. As students would have had to exert additional effort in orderto experience these performance improvements, these results suggests that undocumented youthwere also more motivated after DACA’s enactment. Then, I show that this increased effort hadpositive spillover effects on undocumented students’ US-born peers: at the average campus, whereapproximately 1 percent of students were likely to be undocumented, DACA’s introduction lead toa 3 percent increase in native students’ probability of graduating from high school. These resultsare driven by low-achieving native students. Achievement on ELA exams during high school alsoincreased by 0.06 standard deviations after DACA’s enactment for natives. Gains in achievementoccurred for all US-born students, regardless of baseline achievement.These findings are consistent with several possible mechanisms. First, US-born studentsmay have been affected by direct peer-to-peer influences: increased effort among DACA-eligible stu-2

dents may have inspired their native peers to study harder. Second, improvements in undocumentedyouths’ motivation may have freed up teachers’ and administrators’ time for other instructionalimprovements. Finally, the introduction of DACA may have led to additional investments in schoolwith higher shares of undocumented youth. For instance, if schools trained guidance counselorsto better understand the process of college admissions for DACA-eligible students, this trainingcould have spilled over to their peers.2 I am currently not able to separately identify which of thesemechanisms are driving my results.This paper contributes to two key literatures. First, it adds to the small but growingliterature on spillover effects of policies that increase the returns to schooling. While there is anexisting literature that estimates the direct impact of increasing the returns to education for specificstudent groups (Kuka et al., 2020; Abramitzky & Lavy, 2014), I am aware of only one other studythat tests whether such policies spillover to non-eligible peers (Abramitzky, Lavy, & Perez, 2018),who find that a pay reform change that improved HS outcomes among kibbutz members in Israelalso increased educational attainment for non-kibbutz peers. However, Abramitzky et al. (2018) canonly address whether there are spillover effects on the margin of college enrollment because highschool completion was so high in their setting (over 95 percent were completing). My project buildsupon this recent work by addressing whether policy spillovers exist on the margin of HS completionamong a very different sample of students in a large low-performing school district in the US.Second, I contribute to the emerging literature on the impacts of DACA. To date, moststudies have focused on understanding how the policy affected DACA-eligible students whocompleted high school, and focus on the policy’s affects on their labor market and college outcomes(Pope, 2016; Amuedo-Dorantes & Antman, 2017; Hsin & Ortega, 2018). Only one other studyhas focused on DACA-eligible youth who experienced DACA during high school (Kuka et al.,2020). Kuka et al. (2020) use the American Community Survey (ACS) and find HS graduationrates increased by 2.2. to 7.5 percent for DACA-eligible youth. I am able to make three important2 Itis also important to acknowledge that since DACA induced lower-achieving students to stay enrolled in school,this may have taken up teachers time (or school level resources in general) to the disadvantage of their US-born peers.Given the pattern of results I document (i.e. positive spillovers), it is unlikely that this is the primary mechanism.3

contributions to the literature on DACA. First, I am able to examine intermediate outcomes, whichallows me to test whether DACA led to increased effort in school. Second, I am able to consider theeducational spillover effects of this policy. Third, using zip-code level variation in the concentrationof DACA applicants to approximate the undocumented population allows me to estimate DACAeligibility with less measurement error than prior studies that rely on the absence of citizenship as aproxy for undocumented status.32Policy BackgroundSigned into law under an executive order in June 2012, DACA provides temporary protection fromdeportation, and a work permit for undocumented youth who entered the US as children. DACAeligibility requires that individuals meet a series of age/date of arrival criteria (i.e. arrival to the USbefore they were 16 and by June 2007)4 and minimum education requirements.5 Specifically, tobe program eligible, undocumented youth were required to complete high school, earn a generaleducational development (GED) certificate or equivalent state-authorized exam, or currently beenrolled in school. To continue receiving benefits, DACA recipients must re-apply every two years.6To apply for DACA, individuals have to fill out the application forms, pay a processingfee of 465 and provide documentation to demonstrate that all of the eligibility criteria are met. AsFigure 1 demonstrates, there was a surge in applications once the US Citizenship and ImmigrationServices (USCIS) began accepting applications on August 15, 2012. Roughly 30% of the of theestimated eligible population of 1.7 million applied within the first year (Passel and Lopez, 2012).In Los Angeles, the setting of this study, take-up of DACA was even higher. Dividing the 72,1803 Usingforeign-born non-citizens is the most common way to approximate the undocumented population in theliterature on DACA (e.g. Pope (2016); Kuka et al. (2020); Amuedo-Dorantes and Antman (2017)), however, this ismeasured with noise, as non-citizens include green card holders and temporary visa holders.4 These age/date of arrival criteria require undocumented youth to reside in the US for at least 5 years. Thus,DACA-eligible youth are not recent immigrants. Because DACA eligible youth had already been living in the US for asignificant amount of time when the policy was implemented, they were likely to be well integrated with their peers.5 They also were unable to commit a felony. The number of eligible youth with felonies is likely small (Patler, 2018).6 During DACA renewals youth are not asked whether they still meet these criteria. Thus, it is possible for students tobe enrolled in HS at the time of the initial application, but they have may have dropped out during the renewal process.4

initial applications received in 2012 - 20147 in Los Angeles county by the 111,000 youths estimatedto be immediately eligible for DACA (Batalova, Jeanne and Hooker, Sarah and Capps, Randy, 2014)yields a take-up rate of 65%.82.1Education Incentives for Undocumented Youth Due to DACAA human capital investment model proposed by Kuka et al. (2020) illustrates how DACA likelyincentivized undocumented youth to invest more in their education. To briefly summarize theirmodel, they consider youth choosing a level of education (high school drop-out, high schoolcompletion, or college) based on expected lifetime earnings. DACA recipients receive a workpermit, thus DACA increases the earnings of undocumented youth from the non-legal to the legalwage.9 Moreover, because the risk of deportation is eliminated, DACA increases the expectednumber of years that undocumented youth expect to live and earn a wage in the US.10 Becausehigh school completion is tied to DACA-eligibility, undocumented youth will likely be incentivizedto complete high school to benefit from the increases in expected lifetime earnings due to DACA.However, even if undocumented youth do not consider the increased lifetime earnings driven byDACA, they may still choose to complete high school if they prefer living in the US, and valuethe temporary protection from deportation. Since the returns to college will also increase withlegalization due to DACA, undocumented youth may also be incentivized to enroll in college.112.2DACA-eligible Population in Los AngelesLos Angeles provides an ideal setting to study the effects of DACA on student outcomes. LosAngeles is home to the largest percentage of DACA-beneficiaries in the US, accounting for 147 Author’scalculations using USCIS data described in more detail in Section 3.take-up in Los Angeles was high relative to the national average, there are reasons for incomplete take-up.For