Long‐run peer effects and promotion: Evidence from 70‐plus years of career records in Japan

Abstract We estimate long‐term peer effects in the workplace by investigating whether working with a future executive makes junior employees more likely to be promoted. Using data on career history at the Japanese central administration from 1946 to 2019, we find that long‐term peer effects are substantial and persistent—junior employees who work with a future executive during the first 5 years of their employment are more likely to be promoted to top executive than employees who do not. The empirical results are consistent with the mechanisms of increased human capital, the formation of social connections, and a reduction in information asymmetry.