On the Star Trek? The Gendered Effects of High-Achieving Peers on Career Progression

• Applicant: Professor Helmut Rainer, Ph.D.
• Subject Area: Economic Policy, Applied Economics ; Statistics and Econometrics
• Term: since 2024
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 550273272

In educational settings, it is well-established that a student’s academic performance is influenced by high-achieving peers. These peer effects in school exhibit gender-specific patterns, with girls, in particular, benefitting from having high-performing female classmates. Researchers have suggested that such gender-specific peer effects likely continue to play a pivotal role as individuals transition from the educational sphere into the labor market. Yet, comprehensive evidence on peer effects in the labor markets remains scarce. The proposed project is among the first to estimate gender-disaggregated effects of high-achieving individuals (henceforth, "superstars") on their peers’ long-term labor market outcomes. Specifically, as high-achievers step into the labor market, how do they impact the long-term outcomes of male and female colleagues who embark on their careers alongside them? Overcoming major data limitations that constrained previous studies, the project leverages Danish register data, enabling the tracking of individuals from primary school to their current job, and providing detailed information on ability measures such as school grades and the entire employment path. The empirical challenge in causally estimating peer effects involves the well-known reflection problem and endogenous peer group formation. To overcome these challenges, the project employs a two-way fixed effects model, exploiting variation in superstars within firms across labor market entry cohorts. This approach accounts for selection bias arising from workers sorting into firms with differing probabilities of upward career mobility. As a second key contribution, the project explores mechanisms that may explain peer effects in the labor market. The effects of superstars on peers’ career progression may manifest as positive or negative. Mechanisms underlying positive effects could include knowledge spillovers, reduced free-riding due to peer pressure, and team complementarities that increase productivity. In contrast, negative impacts might result from competition effects or discouragement due to negative comparison. A large-scale survey, linked with administrative data, aims to identify mechanisms underlying both positive and negative impacts of superstars on their peers.

• DFG Programme: Research Grants
• International Connection: Denmark
• Cooperation Partner: Professor Dr. Timo Hener