July 30 is International Day of Friendship, based on the recognition of the relevance and importance of friendship as a noble and valuable sentiment around the world.  

How do social interactions affect the labor market?

Thomas Cornelissen writes, “Evidence suggests that peer pressure affects productivity and is an important reason why workers’ wages and productivity depend on their co-workers’ productivity…Peer effects due to knowledge spillover seem to be relevant in specific situations, such as when newly trained and untrained workers interact, in collaborative team settings or between senior and junior workers. In such instances, firms should encourage social interaction.”

Joseph Price writes, “Workers’ skills are multidimensional, and one of the skills that may contribute to team production is the ability to bring out the best in others.” Most peer effects literature assumes that workers with the highest own productivity are the ones who bring out the best in others. However a study of NBA players found a slight negative correlation between own productivity and the ability to increase the productivity of others. In addition, it is apparent that players who have a selfish style of play boost their own performance measures at the expense of their team’s success.

Read articles on social interactions and the labor market:

• Do social interactions in the workplace lead to productivity spillover among co-workers? by Thomas Cornelissen

• Production spillovers: Are they valued? by Joseph Price

• How should teams be formed and managed? by Hideo Owan

• Effects of regulating international trade on firms and workers (Deutsch) by Raymond Robertson

• How should job displacement wage losses be insured? (Deutsch) by Donald O. Parsons

• Do social interactions in the classroom improve academic attainment? (Deutsch) by Shqiponja Telhaj

• The labor market in Brazil, 2001-2015 (Deutsch) by Sergio Pinheiro Firpo and Renan Pieri

​​​​​​​

Visit the IZA World of Labor site for more concise, informative, evidence-based articles across the spectrum of labor economics.

All newly published one-pagers are also available to read and download in German. Find out more.

Reducing income inequality within countries is of paramount importance among the challenges facing policymakers in the years to come. The UN has included the reduction of inequality among its Sustainable Development Goals, because promoting growth alone may not be enough to help the poor out of poverty when growth is unevenly distributed across households. Read the full commentary.

Have a specific labor market query? Get in touch with one of our designated Topic Spokespeople.

Join our user panel and help inform future marketing and development decisions of IZA World of Labor. Email your interest to our publishing partner and they will be in touch to arrange a short 10-minute phone call. 

• 3rd IZA Junior/Senior Symposium, July 16-17. The third IZA Junior/Senior Labor Symposium will be held at IZA in Bonn, Germany. We shall have 10 papers presented by authors who are between 1 and 6 years past the Ph.D. 

• 15th Annual Migration Meeting, August 9-10. Going into its 15th edition this year, the IZA Annual Migration Meeting aims at bringing together junior and senior migration researchers to discuss their most recent work in a constructive atmosphere

• Call for papers: 2nd IZA/HSE Workshop: Ten Years after the Financial Crisis - Labor Market Adjustment in Emerging and Post-Transition Economies, October 11-12. This second IZA/Higher School of Economics workshop will bring together labor economists who are working on labor market adjustment in the post-Soviet states that emerged from the breakup of the Soviet Union, post-transition countries of Central Europe as well as China. Submission deadline: July 15

• Call for papers: ADAPT International Conference: Professionality, Employment Contracts and Collective Bargaining. November 30-December 1. The most recent evolution in work and production – stemming not only from the impact of technology, but also from globalization and demographic dynamics – opens a new and particularly attractive field of scientific debate. Submission deadline: September 1