Journal article: This paper provides evidence that local social interactions within ethnic groups may explain the puzzling variations in labour-market outcomes across individuals. Being surrounded by working peers increases the probability of being employed and wages. This effect differs through a selection effect: gender and ethnic groups who are discriminated against benefit most from peer effects. The problems of endogeneity and simultaneity of local peer effects are addressed by using data aggregated at the province level and instrumentation. A social multiplier exists: any labour-market shock is magnified with an elasticity of 0.5.