Chapter 5: Choosing a Job: Who Influences You the Most, Parents or Friends?

This chapter examines the relative influence of parents (vertical channel) and friends (horizontal channel) when deciding between employment in the public or private sector. Using a novel database and applying network analysis, the influence of peers is first measured. Next, the peer effect is compared with the impact of parental background on individual preferences. For the private sector, findings indicate that the influence (marginal effect) of friends is greater than that of parents. The opposite is observed for the public sector. However, in the case of public sector employment, the overall effect of the horizontal channel may surpass the vertical channel, as individuals typically have two parents but may have many friends. Additionally, it is found that both parents and friends exert a greater influence on women than on men.