Despite the significant influence that peer motivation is likely to have on educational investments during high school, it is difficult to test empirically since exogenous changes in peer motivation are rarely observed. In this paper, I focus on the 2012 introduction of Deferred Action for Childhood Arrivals (DACA) to study a setting in which peer motivation changed sharply for a subset of high school 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 youth to 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. JEL Codes: I26, H52, J15
Over 13 percent of US students participate in Special Education (SE) programs annually, at a cost of $40 billion. However, the effect of SE placements remains unclear. This paper uses administrative data from Texas to examine the long-run effect of reducing SE access. Our research design exploits variation in SE placement driven by a state policy that required school districts to reduce SE caseloads to 8.5 percent. We show that this policy led to sharp reductions in SE enrollment. These reductions in SE access generated significant reductions in educational attainment, suggesting that marginal participants experience long-run benefits from SE services.