Who benefits the most from peer effects within ethnic group? Empirical evidence on the South African Labour Market

Gaëlle Ferrant () and Yannick Bourquin ()
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Yannick Bourquin: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.cnrs.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper provides evidence that local social interactions within etnic groups may explain the puzzling variations in labour-market outcomes across individuals. Peer effects work first by creating pressure on labor-market participation, second, by conveying information about job opportunities and by raising wages. These effects differ through a selection effect: gender and ethnic groups who are less integrated in the labour market benefit more from peer effect. Finally, networks exhibit decreasing returns. The problems of endogeneity and simultaneity of local peer effects are addressed by using (i) data aggregated at the province level, (ii) the distribution of the sex of the peers' siblings as an instrumental variable and (iii) a quasi-panel data approach relying on the Hausman-Taylor estimator. The importance of social interactions in the labour market suggests that a social multiplier exists and our estimates show that any labour-market shock is magnified with an elasticity of 0.5

Keywords: Peer efects; development economics; labour; South Africa (search for similar items in EconPapers)
JEL-codes: J15 J16 O18 Z13 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2011-07
New Economics Papers: this item is included in nep-afr, nep-hme, nep-lab, nep-lma, nep-soc and nep-ure
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ftp://mse.univ-paris1.fr/pub/mse/CES2011/11044.pdf (application/pdf)

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Working Paper: Who benefits the most from peer effects within ethnic group ? Empirical evidence on the South African Labour Market (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:11044

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