Peer Effects in Labor Market Training

2022/11/22 by Ulrike Unterhofer, Unterhofer, Ulrike
Economics, Econometrics and Finance · Social Sciences · #Labor market dynamics and wage inequality #Economic Policies and Impacts #Gender, Labor, and Family Dynamics

paper · pdf · doi:10.48550/arxiv.2211.12366

Abstract

This paper shows that group composition shapes the effectiveness of labor market training programs for jobseekers. Using rich administrative data from Germany and a novel measure of employability, I find that participants benefit from greater average exposure to highly employable peers through increased long-term employment and earnings. The effects vary significantly by own employability: jobseekers with a low employability experience larger long-term gains, whereas highly employable individuals benefit primarily in the short term through higher entry wages. An analysis of mechanisms suggests that within-group competition in job search attenuates part of the positive effects that operate through knowledge spillovers.

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