Peer effects in employment status: Evidence from housing lotteries

Does a high peer employment rate increase individual employment probability? We exploit the random assignment of temporary housing to evacuees of the Fukushima Daiichi nuclear power plant accident to identify the effect of neighbors’ employment rates on an individual's probability of finding a job post-evacuation. Using unique survey data, we find that a one percentage-point increase in the initial employment rate of an individual's peers increases the probability of employment after six months by about 0.2 percentage points. We also show suggestive evidence to indicate that the social norm to work serves as an underlying mechanism of the observed peer effect despite data limitations.