Peers and Motivation at Work

ABSTRACT

We study workplace peer effects by randomly varying work assignments at a tea estate in Malawi. We find that increasing mean peer ability by 10 percent raises productivity by 0.3 percent. This effect is driven by the responses of women. Neither production nor compensation externalities cause the effect because workers receive piece rates and do not work in teams. Additional analyses provide no support for learning or socialization as mechanisms. Instead, peer effects appear to operate through “motivation”—given the choice to be reassigned, most workers prefer working near high-ability coworkers because these peers motivate them to work harder.