Peer Effects in the Workplace
AbstractExisting evidence on peer effects in the productivity of coworkers stems from either laboratory experiments or real-world studies referring to a specific firm or occupation. In this paper, we aim at providing more generalizable results by investigating a large local labor market, with a focus on peer effects in wages rather than productivity. Our estimation strategy--which links the average permanent productivity of workers' peers to their wages--circumvents the reflection problem and accounts for endogenous sorting of workers into peer groups and firms. On average over all occupations, and in the type of high-skilled occupations investigated in studies on knowledge spillover, we find only small peer effects in wages. In the type of low-skilled occupations analyzed in extant studies on social pressure, in contrast, we find larger peer effects, about one-half the size of those identified in similar studies on productivity.
CitationCornelissen, Thomas, Christian Dustmann, and Uta Schönberg. 2017. "Peer Effects in the Workplace." American Economic Review, 107 (2): 425-56. DOI: 10.1257/aer.20141300
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J41 Labor Contracts
- M12 Personnel Management; Executives; Executive Compensation
- M54 Personnel Economics: Labor Management