Online Social Network Effects in Labor Markets: Evidence From Facebook's Entry into College Campuses

75 Pages Posted: 16 May 2019 Last revised: 15 Sep 2021

Date Written: May 2, 2019

Abstract

Using quasi-random variation from Facebook’s entry to college campuses, I exploit a natural experiment to estimate the effect of online social network access on future earnings. My estimates imply that access to Facebook for an additional year in college causes a .61 percentile increase in a cohort’s average earnings, translating to an average wage increase of around $970 in 2014. My
results also suggest that Facebook access decreases income inequality within a cohort. I provide evidence that wage increases comes through the channel of in creased social ties to former classmates, which leads to strengthened employment networks between college alumni.

Keywords: social networks, labor economics, education, Facebook, technology, online platforms

JEL Classification: I23, J62, J30, D85

Suggested Citation

Armona, Luis, Online Social Network Effects in Labor Markets: Evidence From Facebook's Entry into College Campuses (May 2, 2019). Available at SSRN: https://ssrn.com/abstract=3381938 or http://dx.doi.org/10.2139/ssrn.3381938

Luis Armona (Contact Author)

Stanford University ( email )

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