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High wage workers and high wage peers

Author

Listed:
  • Battisti, Michele

Abstract

This paper investigates the effect of coworker characteristics on wages, measured by the average person effect of coworkers in a wage regression. The effect of interest is identified from within-firm changes in workforce composition, controlling for person effects, firm effects, and sector-specific time trends. My estimates are based on a linked employer employee dataset for the population of workers and firms of the Italian region of Veneto for years 1982-2001. I find that a 0.1 increase in the average labour market value of coworkers' skills (which is around one within-person standard deviation) is associated with a 3.6 percent wage premium. I also find that a sizeable share of the wage variation previously explained by unobserved individual and firm heterogeneity may be due to variation in coworker skills. An event-type study, a Placebo exercise and a series of heterogeneity analyses lend credibility to the baseline results. I also evaluate the role of the spillover effects for wage differentials between specific groups of workers. I find that around 12 percent of the gender wage gap and 10 to 16 percent of the immigrant wage gap can be explained by differences in coworker characteristics.

Suggested Citation

  • Battisti, Michele, 2017. "High wage workers and high wage peers," Munich Reprints in Economics 49907, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:49907
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    Cited by:

    1. Maria De Paola & Roberto Nisticò & Vincenzo Scoppa, 2024. "Workplace Peer Effects in Fertility Decisions," CSEF Working Papers 714, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Sep 2025.
    2. Jaime Arellano-Bover & Fernando Saltiel, 2026. "Differences in On-the-Job Learning across Firms," Journal of Labor Economics, University of Chicago Press, vol. 44(1), pages 149-188.
    3. Thomas Cornelissen & Christian Dustmann & Uta Schönberg, 2017. "Peer Effects in the Workplace," American Economic Review, American Economic Association, vol. 107(2), pages 425-456, February.
    4. Cardoso, Ana Rute & Guimaraes, Paulo & Portugal, Pedro & Reis, Hugo, 2018. "The Returns to Schooling Unveiled," IZA Discussion Papers 11419, IZA Network @ LISER.
    5. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 47508, University Library of Munich, Germany.
    6. Emanuela Ghignoni & Marilena Giannetti & Vincenzo Salvucci, 2022. "The double "discrimination" of foreign women: A matching comparisons approach," Working Papers in Public Economics 225, Department of Economics and Law, Sapienza University of Rome.
    7. Alessandra Casarico & Edoardo Di Porto & Joanna Kopinska & Salvatore Lattanzio, 2025. "Leave and Let Leave: Workplace Peer Effects in Fathers’ Take-up of Parental Leave," RFBerlin Discussion Paper Series 25126, ROCKWOOL Foundation Berlin (RFBerlin).
    8. Bentsen, Kristian Hedeager & Munch, Jakob R. & Schaur, Georg, 2019. "Education spillovers within the workplace," Economics Letters, Elsevier, vol. 175(C), pages 57-59.
    9. Carlo Dell’Aringa & Claudio Lucifora & Laura Pagani, 2015. "Earnings differentials between immigrants and natives: the role of occupational attainment," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-18, December.
    10. Davide Dottori & Francesca Modena & Giulia Martina Tanzi, 2023. "Measuring peer effects in parental leaves: evidence from a reform," Temi di discussione (Economic working papers) 1399, Bank of Italy, Economic Research and International Relations Area.
    11. Grinza, Elena & Quatraro, Francesco, 2019. "Workers’ replacements and firms’ innovation dynamics: New evidence from Italian matched longitudinal data," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    12. Hartog, Joop & Raposo, Pedro, 2017. "Are starting wages reduced by an insurance premium for preventing wage decline? Testing the prediction of Harris and Holmstrom (1982)," Labour Economics, Elsevier, vol. 48(C), pages 105-119.
    13. Demir, Gökay & Hertweck, Friederike & Sandner, Malte & Yükselen, Ipek, 2024. "Coworker Networks from Student Jobs: A Flying Start at Labor Market Entry?," IZA Discussion Papers 17541, IZA Network @ LISER.
    14. Antonella BELLINO & Giuseppe CELI, 2016. "The Migration-Trade Nexus in the Presence of Vertical and Horizontal Product Differentiation," CELPE Discussion Papers 137, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    15. Portugal, Pedro & Reis, Hugo & Guimaraes, Paulo & Cardoso, Ana Rute, 2025. "Human Capital Spillovers and the External Returns to Education," IZA Discussion Papers 17690, IZA Network @ LISER.
    16. Dottori, Davide & Modena, Francesca & Tanzi, Giulia Martina, 2024. "Peer effects in parental leave: Evidence from Italy," Labour Economics, Elsevier, vol. 89(C).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J79 - Labor and Demographic Economics - - Labor Discrimination - - - Other

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