Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom
Andreas Diemer
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
Abstract:
There is little evidence on the relevance of social networks in the aggregate spatial diffusion of localised economic shocks. This paper uses novel data on the universe of online friendships in the US to uncover how plausibly exogenous surges in the local demand for jobs in the oil and gas industry can affect the economy of spatially distant but socially proximate places. Although most of the diffusion is limited to geographically proximate areas, social networks matter too. According to 2SLS estimates, a million dollar per capita increase in oil and gas extraction raises per capita wages by over 5,000 dollars for workers reporting their incomes in counties located as far as 1,200 km away from the drilling site, but strongly socially connected to it. This effect is likely explained by the relocation of transient workers within the industry, providing new aggregate evidence in support of the literature on job information networks.
Keywords: social networks; fracking; spatial diffusion; job search (search for similar items in EconPapers)
JEL-codes: J61 J64 L71 Q33 R12 R23 Z13 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2020-08
New Economics Papers: this item is included in nep-ene, nep-geo, nep-lab, nep-net and nep-ure
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Citations: View citations in EconPapers (2)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:105868
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