Peer Effects in the Workplace: A Network Approach

We study both endogenous and exogenous peer effects in worker productivity using an explicit network approach. We apply this method to data from an in-house call center of a multinational mobile network operator that include detailed information on individual performance. We find that a 10% increase in average co-worker current productivity increases worker productivity by 5.3%. A 10% increase in average co-worker permanent productivity decreases worker productivity by 3.2%. Older workers, low tenure workers, and low-permanent productivity workers respond the most to changes in co-worker productivity. These workers free ride in the presence of co-workers from the top quartile of the distribution of permanent productivity. Counterfactual exercises demonstrate how managers could mitigate the problem of free riding by re-shuffling workers into different co-worker networks.