The role of peers in estimating tenure-performance profiles: Evidence from personnel data

In this paper, we estimate tenure-performance profiles using unique panel data thatcontain detailed information on individual workers’performance. We find that 10per cent increase in tenure leads to an increase in performance of 5.5 per cent of astandard deviation. This translates to an average performance increase of about 75per cent within the first year of the employment relationship. Furthermore, we showthat there are peer effects in learning on-the-job: Workers placed in teams with moreexperienced and thus more productive peers perform significantly better than thoseplaced in teams with less experienced peers. An increase in the average team tenure byone standard deviation leads to an increase of 11 to 14 per cent of a standard deviationin performance.