Online Social Network Effects in Labor Markets: Evidence from Facebook's Entry to College Campuses

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. I estimate that access to Facebook for an additional year in college causes a .62 percentile increase in a cohort's average earnings, translating to an average wage increase of around $970 in 2014, and decreases income inequality within a cohort. I provide indirect evidence that wage increases come through the channel of increased social ties between college alumni, strengthened employment networks, and increased match value between students' majors and later occupations.