Might Facebook boost wages?

From Luis Armona at Stanford:

In this paper, I estimate the causal effect of increased exposure to online social networks during college on future labor market outcomes.

Using quasi-random variation from Facebook’s entry to college campuses during its infancy, I exploit a natural experiment to determine the relationship between online social network access and future earnings.

I find a positive effect on wages from Facebook access during college. This positive effect is largest in magnitude for female students, and students from lower-middle class families.

I provide evidence that this positive effect from Facebook access comes through the channel of increased social ties to former classmates, which in turn leads to strengthened employment networks between college alumni.

My estimates imply that access to Facebook for 4 years of college causes a 2.7 percentile increase in a cohort’s average earnings, relative to the earnings of other individuals born in the same year. This translates to an average nominal wage increase of $3,000-$5,000 in 2014.

To be clear, some of that could be a wage distribution effect.  Still, this paper points to the possibility of some very real networking and matching gains from the use of Facebook, and perhaps those gains do not favor traditional elites.

For the pointer I thank the excellent Kevin Lewis.


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