The economic value of local social networks

Frank Ethridge, Maryann Feldman, Tom Kemeny and Ted Zoller

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The idea that local social capital yields economic benefits is fundamental to theories of agglomeration, and central to claims about the virtues of cities. However, this claim has not been evaluated using methods that permit more confident statements about causality. This paper examines what happens to firms that become affiliated with a highly-connected local individual or “dealmaker.” We adopt a quasi-experimental approach, combining difference-in-differences and propensity score matching to address selection and identification challenges. The results indicate that firms who link to highly-connected local dealmakers are rewarded with substantial gains in employment and sales when compared to a control group.

Keywords: cities; economic development; social networks; social capital (search for similar items in EconPapers)
JEL-codes: L14 O12 O18 R11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-01
New Economics Papers: this item is included in nep-geo, nep-hpe, nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://eprints.lse.ac.uk/64505/ Open access version. (application/pdf)

Related works:
Journal Article: The economic value of local social networks (2016)
Working Paper: The Economic Value of Local Social Networks (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:64505

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