Applied Seminar 
Time: 12:15 pm – 13:30 pm
Date: 25th of January
Room : 3001

Florian Grosset (Columbia) “Complementarities in Labor Supply”

Abstract :This paper examines complementarities in labor supply:  to what extent does a person’s desire to work at a firm depend on whether others in her social network also work at the firm? We conduct two field experiments in urban Côte d’Ivoire. In the first experiment, job seekers are 16pp more likely to accept a formal full-time factory job if their network members also receive a job offer, and 15pp more likely to stay in that job four months later—but only if they will be employed in the same shift (rather than different shifts). These effects are driven by workers with long commute times, who can commute to work together. Consistent with this channel, in the firm’s administrative data, workers’ own attendance and turnover are predicted by the attendance and quits of co-commuting peers. In a second field experiment with a different firm, we again randomize whether a worker’s network members are offered a job, whether they would be co-located with the worker, and job location—inducing exogenous variation in commute time.  We replicate the finding of complementarities in labor supply, but only in the case of long assigned commute times. These findings indicate that the social composition of one’s peers can have large impacts on labor supply, and suggest that one important mechanism is commuting costs—which are especially high in developing country cities.  Our results provide a novel explanation for key features of urban labor markets, including firms’ widespread use of referrals for hiring and persistent gaps in employment across social groups.

Organizer: Roland RATHELOT