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Peer Effects in Program Participation

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  • Gordon B. Dahl
  • Katrine V. Løken
  • Magne Mogstad

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. In an attempt to promote gender equality, a reform made fathers of children born after April 1, 1993 in Norway eligible for one month of governmental paid paternity leave. Fathers of children born before this cutoff were not eligible. 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 coworker or brother 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18198.

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Date of creation: Jun 2012
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Publication status: published as Gordon B. Dahl & Katrine V. L?ken & Magne Mogstad, 2014. "Peer Effects in Program Participation," American Economic Review, American Economic Association, vol. 104(7), pages 2049-74, July.
Handle: RePEc:nbr:nberwo:18198

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Citations

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Cited by:
  1. Albrecht Glitz, 2013. "Coworker Networks in the Labour Market," CESifo Working Paper Series 4250, CESifo Group Munich.
  2. 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.
  3. Ciliberto, Federico & Miller, Amalia R & Nielsen, Helena S & Simonsen, Marianne, 2013. "Playing the Fertility Game at Work: An Equilibrium Model of Peer Effects," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9429, C.E.P.R. Discussion Papers.
  4. Dahl, Gordon B. & Kostol, Andreas Ravndal & Mogstad, Magne, 2014. "Family Welfare Cultures," IZA Discussion Papers 8265, Institute for the Study of Labor (IZA).
  5. 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).
  6. 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.
  7. Johansson, Per & Karimi, Arizo & Nilsson, Peter, 2014. "Gender Differences in Shirking: Monitoring or Social Preferences? Evidence from a Field Experiment," IZA Discussion Papers 8133, Institute for the Study of Labor (IZA).
  8. Kummer, Michael E., 2013. "Spillovers in networks of user generated content: Evidence from 23 natural experiments on Wikipedia," ZEW Discussion Papers 13-098, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. 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.
  10. 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.

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