Homophily and Community Structure at Scale: An Application to a Large Professional Network

Abstract

Professional networks affect labor market outcomes, efficiency, and knowledge diffusion. We study a large business card exchange network from Eight, a contact and career management app popular in Japan. Our empirical analysis is guided by a structural model of equilibrium network formation, with observable and unobservable heterogeneity, estimated via a two-steps approach that reduces computational challenges. In the first step, we recover the unobservable types; in the second step, we estimate the structural parameters, conditioning on estimated unobservables. Our results highlight the role of shared contacts and homophily in observables and unobservables in shaping the network of professional contacts.