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Analyses of neighbourhood externalities have failed to produce consistent findings of their influence on outcomes. We explore variation in estimations of youths’ education expectations between two sets of neighbourhood proxies: one corresponding to the neighbourhood in which students’ schools were located; the other to students’ home neighbourhoods. Estimations including the latter were found to be less likely to suffer from misspecifications. This might help explain variation in previous findings and provides greater confidence in results showing that there are important neighbourhood effects that influence youths’ education.
