The Peer Effect on Future Wages in the Workplace

Long Hong and Salvatore Lattanzio

Journal of Applied Econometrics, 2025, vol. 40, issue 5, 521-539

Abstract: This paper examines workplace peer effects in two directions, leveraging employer‐employee data for Italy. First, using a novel estimation approach and addressing endogenous worker‐peer sorting, we estimate that a 10% increase in peer quality raises one's wage by 1.8% in the next year. The effect declines to 0.7% after 5 years. Second, in an event study around mobility episodes, we quantify wage changes associated with the entry and leave of high‐quality and low‐quality workers. Hiring high‐quality workers positively affects peer wages, as does separating from low‐quality workers. Movers experience immediate gains upon moving to high‐quality peer groups.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/jae.3127

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:japmet:v:40:y:2025:i:5:p:521-539

Ordering information: This journal article can be ordered from
http://www3.intersci ... e.jsp?issn=0883-7252

Access Statistics for this article

Journal of Applied Econometrics is currently edited by M. Hashem Pesaran

More articles in Journal of Applied Econometrics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().