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Peer effects in employment: results from Mexico's poor rural communities

  • Araujo, Caridad
  • de Janvry, Alain


    (University of California, Berkeley. Dept of agricultural and resource economics and policy)

  • Sadoulet, Elisabeth


    (University of California, Berkeley. Dept of agricultural and resource economics and policy)

Empirical evidence has shown that off-farm non-agricultural (OFNA) employment offers a major pathway from poverty for rural populations. However, the pattern of participation in these activities is heterogeneous across categories of individuals and poorly understood. We explore the role of spillovers from peers on an individual’s participation in formal and informal OFNA employment using village census data for rural Mexico. We test and reject the possibility that peers’ decisions could be proxying for unobserved individual, village-level, or individual-type effects. We find that peers’ participation in OFNA employment has a large impact on an individual’s ability to engage in this type of employment, both formal and informal, even after controlling for individual attributes and village characteristics. Peer effects are structured by similarities in gender, ethnicity, educational level, and land endowment. We find that marginal peer effects tend to be stronger for categories of individuals that are already more engaged in OFNA employment, such as men, non-indigenous people, the more educated, and the landless, contributing to reinforcing inequalities in accessing these jobs. However, the role of peer effects relative to that of education in obtaining formal OFNA employment is more important for members of groups that are less engaged in these jobs, such as women, indigenous people, the less educated, and smallholders.

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Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 0991.

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Length: 26 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:are:cudare:0991
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  1. Marianne Bertrand & Erzo F. P. Luttmer & Sendhil Mullainathan, 2000. "Network Effects And Welfare Cultures," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 1019-1055, August.
  2. Andrea Ichino & Giovanni Maggi, 1999. "Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm," NBER Working Papers 7415, National Bureau of Economic Research, Inc.
  3. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  4. Jacob M. Markman & Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2003. "Does peer ability affect student achievement?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 527-544.
  5. Zimmerman, David J., 1999. "Peer Effects in Academic Outcomes: Evidence From a Natural Experiment," Williams Project on the Economics of Higher Education DP-52, Department of Economics, Williams College.
  6. Esther Duflo & Emmanuel Saez, 2002. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," NBER Working Papers 8885, National Bureau of Economic Research, Inc.
  7. Reardon, Thomas & Berdegue, Julio & Escobar, German, 2001. "Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications," World Development, Elsevier, vol. 29(3), pages 395-409, March.
  8. Yannis M. Ioannides & Jeffrey E. Zabel, 2000. "Neighborhood Effects and Housing Demand," Discussion Papers Series, Department of Economics, Tufts University 0012, Department of Economics, Tufts University.
  9. Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
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