Explanation:
After the fall of the Berlin Wall in 1989, West German families that had relatives in East Germany saw an increase in their income, and this growth in incomes was significantly higher than that of comparable West German families without such family ties to the East.
Why did this happen? Are personal and family ties really so important to our economic outcomes that they result in systematic differences in income growth?
Researchers have studied this question and have found empirical support for the idea that social connections do, indeed, have large effects on economic outcomes.
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