Network structure and economic prosperity in municipalities: A large-scale test of social capital theory using social media data

Abstract

In this study, we analyze the relationship between network structure and economic prosperity in 438 Dutch municipalities. We focus on the structural aspects of social capital theory and test how three forms of social capital – network density, fragmentation (bonding), diversity and geographical distance of ties (bridging) – are associated with economic prosperity at the municipality level. We use data from a Dutch online social network that consists of more than 10 million users to test the hypotheses. We find that communities that have high network diversity are also more prosperous economically, while high network fragmentation is associated with lower prosperity. Contrary to previous literature, we find some support that network density at the community level is negatively associated with economic prosperity.