Who benefits the most from peer effects within ethnic group? Empirical evidence on the South African Labour Market
AbstractThis 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.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 11044.
Length: 47 pages
Date of creation: Jul 2011
Date of revision:
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Peer efects; development economics; labour; South Africa.;
Find related papers by JEL classification:
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-08-02 (Africa)
- NEP-ALL-2011-08-02 (All new papers)
- NEP-HME-2011-08-02 (Heterodox Microeconomics)
- NEP-LAB-2011-08-02 (Labour Economics)
- NEP-LMA-2011-08-02 (Labor Markets - Supply, Demand, & Wages)
- NEP-SOC-2011-08-02 (Social Norms & Social Capital)
- NEP-URE-2011-08-02 (Urban & Real Estate Economics)
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