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Peer Effects in Labor Market Training

Ulrike Unterhofer

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Abstract: This paper shows that the group composition matters for the effectiveness of labor market training programs for jobseekers. Using rich administrative data from Germany, I document that greater average exposure to highly employable peers leads to increased employment stability after program participation. Peer effects on earnings are positive and long-lasting in classic vocational training and negative but of short duration in retraining, pointing to different mechanisms. Finally, I also find evidence for non-linearities in effects and show that more heterogeneity in the peer group is detrimental.

Date: 2022-11, Revised 2023-06
New Economics Papers: this item is included in nep-eur, nep-net and nep-ure
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Handle: RePEc:arx:papers:2211.12366