Differential Network Effects on Economic Outcomes: A Structural Perspective.

In a study of about 33,000 individuals in a south Asian country, we find that structural diversity, measured as the fraction of open triads in an ego-network, shows a relatively strong association with individual income. After including all the relevant control variables, the effect of structural diversity becomes exclusive to the highly educated individuals. We hypothesize these results are due to concentrated distribution of economic opportunities among the highly educated social strata combined with homophily among members of the same group. This process leads to two important societal consequences: extra network advantages for the highly educated, similar to the rich club effect, and inadequate diffusion of economic opportunities to the low educated social strata.