Entrepreneurship, Social Networks, and Economic Opportunity

Abstract

This collection of essays explores the importance of interpersonal relationships for economic phenomena. Chapter 1 analyzes the role of social networks measured on Facebook in promoting the formation of new businesses in the United States. I find that connections to existing entrepreneurs encourages individuals to start firms. The importance of connections to entrepreneurs differs dramatically by demographic group and location, suggesting that existing policies could be targeted in ways that increase their effectiveness. Chapter 2 demonstrates theoretically how relationships among entrepreneurs might contribute to long-run city population growth. The model predicts that city population growth increases after a negative shock to physical capital, consistent with the existing literature, but growth decreases after a negative shock to human capital. I test for the effects of a negative shock to human capital using differences in mortality from the 1918 Influenza across U.S. cities, and find that the long-run growth effects from the pandemic match the predictions of the model. Chapter 3 returns to social network data from Facebook in order to construct new measures of social capital based on literatures across the social sciences. I demonstrate the importance of distinguishing these forms of social capital by analyzing their associations with economic mobility across areas in the U.S. I find that differences in connections between high-SES and low-SES individuals is among the strongest predictors of upward economic mobility found to date.