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Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom

Diemer, Andreas (2020) Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom. Geography and Environment Discussion Paper Series (12). Department of Geography and Environment, LSE, London, UK.

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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.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.lse.ac.uk/geography-and-environment/res...
Additional Information: © 2020 The Author
Divisions: Geography & Environment
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HM Sociology
H Social Sciences > HT Communities. Classes. Races
JEL classification: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J64 - Unemployment: Models, Duration, Incidence, and Job Search
L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L71 - Mining, Extraction, and Refining: Hydrocarbon Fuels
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q33 - Resource Booms
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population
Z - Other Special Topics > Z1 - Cultural Economics; Economic Sociology; Economic Anthropology > Z13 - Social Norms and Social Capital; Social Networks
Date Deposited: 05 Aug 2020 07:30
Last Modified: 22 Oct 2020 23:29
URI: http://eprints.lse.ac.uk/id/eprint/105868

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