Abstract
We investigate peer correlations in income using a novel panel of data from a village in China. We construct a complete and heterogeneous social connections (guanxi) network that includes all households, and use spatial-network econometric models to estimate peer correlations. The results provide unique empirical evidence for the existence of a peer correlation in income, even after netting out influences of family characteristics, contextual effects, and various unobservable factors. We identify peer effects in land and labor allocations as the drivers of peer correlations in income.
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