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Peer Effects in Program Participation

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  • Dahl, Gordon B.

    ()
    (University of California, San Diego)

  • Loken, Katrine Vellesen

    ()
    (University of Bergen)

  • Mogstad, Magne

    ()
    (University of Chicago)

Abstract

The influence of peers could play an important role in the take up of social programs. However, estimating peer effects has proven challenging given the problems of reflection, correlated unobservables, and endogenous group membership. We overcome these identification issues in the context of paid paternity leave in Norway using a regression discontinuity design. Our approach differs from existing literature which attempts to measure peer effects by exploiting random assignment to peer groups; in contrast, we study peer effects in naturally occurring peer groups, but exploit random variation in the "price" of a social program for a subset of individuals. Fathers of children born after April 1, 1993 in Norway were eligible for one month of governmental paid paternity leave, while fathers of children born before this cutoff were not. There is a sharp increase in fathers taking paternity leave immediately after the reform, with take up rising from 3% to 35%. While this quasi-random variation changed the cost of paternity leave for some fathers and not others, it did not directly affect the cost for the father's coworkers or brothers. Therefore, any effect on the brother or the coworker can be attributed to the influence of the peer father in their network. Our key findings on peer effects are four-fold. First, we find strong evidence for substantial peer effects of program participation in both workplace and family networks. Coworkers and brothers are 11 and 15 percentage points, respectively, more likely to take paternity leave if their peer father was induced to take up leave by the reform. Second, the most likely mechanism is information transmission about costs and benefits, including increased knowledge of how an employer will react. Third, there is essential heterogeneity in the size of the peer effect depending on the strength of ties between peers, highlighting the importance of duration, intensity, and frequency of social interactions. Fourth, the estimated peer effect gets amplified over time, with each subsequent birth exhibiting a snowball effect as the original peer father's influence cascades through a firm. Our findings demonstrate that peer effects can lead to long-run equilibrium participation rates which are substantially higher than would otherwise be expected.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6681.

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Length: 67 pages
Date of creation: Jun 2012
Date of revision:
Publication status: published in: American Economic Review, 2014, 104 (7), 2049-2074
Handle: RePEc:iza:izadps:dp6681

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Keywords: social interactions; peer effects; program participation;

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Cited by:
  1. Kummer, Michael E., 2013. "Spillovers in networks of user generated content: Evidence from 23 natural experiments on Wikipedia," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-098, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Liu, Hong & Sun, Qi & Zhao, Zhong, 2013. "Social Learning and Health Insurance Enrollment: Evidence from China's New Cooperative Medical Scheme," IZA Discussion Papers 7251, Institute for the Study of Labor (IZA).
  3. Johansson, Per & Karimi, Arizo & Nilsson, J Peter, 2014. "Gender differences in shirking: monitoring or social preferences? Evidence from a field experiment," Working Paper Series, Center for Labor Studies, Uppsala University, Department of Economics 2014:2, Uppsala University, Department of Economics.
  4. Glitz, Albrecht, 2013. "Coworker Networks in the Labour Market," IZA Discussion Papers 7392, Institute for the Study of Labor (IZA).
  5. Gordon B. Dahl & Andreas Ravndal Kostol & Magne Mogstad, 2013. "Family Welfare Cultures," NBER Working Papers 19237, National Bureau of Economic Research, Inc.
  6. Asphjell, Magne K. & Hensvik, Lena & Nilsson, J. Peter, 2013. "Businesses, Buddies, and Babies: Fertility and Social Interactions at Work," Working Paper Series, Center for Labor Studies, Uppsala University, Department of Economics 2013:8, Uppsala University, Department of Economics.
  7. Ciliberto, Federico & Miller, Amalia & Skyt Nielsen, Helena & Simonsen, Marianne, 2013. "Playing the Fertility Game at Work: An Equilibrium Model of Peer Effects," MPRA Paper 45914, University Library of Munich, Germany.
  8. Noam Yuchtman & Florian Ederer & Bruno Ferman & Leonardo Bursztyn, 2013. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," 2013 Meeting Papers, Society for Economic Dynamics 222, Society for Economic Dynamics.
  9. Løken, Katrine V. & Lommerud, Kjell Erik & Reiso, Katrine Holm, 2014. "Single Mothers and their children: Evaluating a work-encouraging welfare reform," Working Papers in Economics, University of Bergen, Department of Economics 04/14, University of Bergen, Department of Economics.
  10. Aakvik, Arild & Hansen, Frank & Torsvik, Gaute, 2013. "Dynamic Peer Effects in Sales Teams," Working Papers in Economics, University of Bergen, Department of Economics 10/13, University of Bergen, Department of Economics.

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