Peer Effects in the Workplace

59 Pages Posted: 28 Sep 2013

See all articles by Thomas Cornelißen

Thomas Cornelißen

University of Hannover

Christian Dustmann

University College London; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Uta Schönberg

University of Rochester; IZA Institute of Labor Economics

Abstract

Existing evidence on peer effects in a work environment stems from either laboratory experiments or from real-word studies referring to a specific firm or specific occupation. Yet, it is unclear to what extent these findings apply to the labor market in general. In this paper, therefore, we investigate peer effects in the workplace for a representative set of workers, firms, and occupations 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 the endogenous sorting of workers into peer groups and firms.On average, we find only small peer effects in wages. We also find small peer effects in the type of high skilled occupations which more closely resemble those used in studies on knowledge spillover. In the type of low skilled occupations analyzed in existing studies on social pressure, in contrast, we find larger peer effects, about half the size of those identified in similar studies on productivity.

Keywords: knowledge spillover, social pressure, wage structure

JEL Classification: J24, J31

Suggested Citation

Cornelißen, Thomas and Dustmann, Christian and Schönberg, Uta, Peer Effects in the Workplace. IZA Discussion Paper No. 7617, Available at SSRN: https://ssrn.com/abstract=2332631

Thomas Cornelißen (Contact Author)

University of Hannover ( email )

Welfengarten 1
D-30167 Hannover, 30167
Germany

Christian Dustmann

University College London ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 20 7679 5832 (Phone)
+44 20 7916 2775 (Fax)

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Uta Schönberg

University of Rochester ( email )

Rochester, NY 14627
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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