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The economic value of local social networks

Ethridge, Frank, Feldman, Maryann, Kemeny, Tom and Zoller, Ted (2015) The economic value of local social networks. SERC discussion papers (SERCDP0170). Spatial Economics Research Centre, London, UK.

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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.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.spatialeconomics.ac.uk/
Additional Information: © 2015 The Authors
Divisions: Spatial Economics Research Centre
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O18 - Regional, Urban, and Rural Analyses
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
Sets: Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Date Deposited: 25 Nov 2015 11:39
Last Modified: 28 Feb 2019 00:03
Funders: Economic and Social Research Council, Department for Business, Innovation & Skills, Welsh Government
URI: http://eprints.lse.ac.uk/id/eprint/64505

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