Who You Meet Matters: International Evidence on Economic Connectedness and Social Mobility

Abstract

Abstract We construct the first internationally comparable measure of offline economic connectedness (EC), extending the online framework of Chetty et al. to a cross-country setting. We conceptualize EC as access to individuals in high-status occupations and measure it as the probability that individuals from below-median income backgrounds are connected to at least one such individual (based on ISEI-88 classifications). We estimate EC both non-parametrically and using logistic specifications with country fixed effects and individual-specific controls to test for systematic cross-country differences. Using harmonized data across 13 Western countries, we document substantial variation in economic connectedness, ranging from below 51 % in countries such as Austria and Japan to over 78 % in Iceland and Switzerland. Consistent with findings for the U.S., we show that EC is positively correlated with intergenerational income mobility, suggesting that differences in social networks are associated with cross-country variation in economic opportunity.