How did location affect adoption of the commercial Internet? Global village vs. urban leadership

We provide a framework and evidence to confront two contradictory yet common assertions: (1) new technology such as the Internet favors businesses in urban areas and (2) the Internet reduces the importance of distance for economic activity. Controlling for other factors, we show that participation in the Internet is more likely in rural areas than in urban areas. This is particularly true for technologies that involve communication across establishments. Nevertheless, talk of the dissolution of cities is premature. Frontier Internet technologies for communication within an establishment appear more often at establishments in urban areas, even with industry controls.     

Publication Bias in the Economic Freedom and Economic Growth Literature

Abstract.  The impact of institutions on economic performance has attracted significant attention from researchers, as well as from policy reformers. A rapidly growing area in this literature is the impact of economic freedom on economic growth. The aim of this paper was to explore publication bias in this literature by means of traditional funnel plots, meta‐significance testing, as well as by bootstrapping these meta‐significance tests. When all the available estimates are combined and averaged, there seems to be evidence of a genuine and positive economic freedom – economic growth effect. However, it is also shown that the economic freedom – economic growth literature is tainted strongly with publication bias. The existence of publication bias makes it difficult to identify the magnitude of the genuine effect of economic freedom on economic growth. The paper explores the differences between aggregate and disaggregate measures of economic freedom and shows that selection effects are stronger when aggregate measures are used.     

ARE COGNITIVE SKILLS RELEVANT IN GENDER EARNINGS DECOMPOSITIONS?

While cognitive skills are known to play an important role in labour market success, empirical evidence is mainly concentrated in its effect on returns to schooling. Evidence on the role of cognitive skills in gender earnings gap decompositions is virtually absent. I use two approaches to investigate the potential for cognitive skills to affect the size and pattern of the unexplained component of the earnings gap (‘relative discrimination’) across the wage distribution, using data from the International Adult Literacy Survey (IALS). It has been shown that when the raw cognitive score is used to control for cognitive skills, the return to schooling cognitive skills is generally underestimated. Once a distinction is made about the origins of cognitive skills (acquired in school versus outside the school), the returns to cognitive skills can vary depending on their origin. I find that using the raw score to control for cognitive skills does not result in any significantly different estimates of the unexplained component of the gap compared to when cognitive skills are not controlled for. However, once cognitive skills by origin of skill are used in place of total cognitive skills, the results change substantially for three of the five countries examined.     

Insurance and rural welfare: what can panel data tell us?

Assessing the scope for insurance in rural communities usually requires a structural model of household behaviour under risk. One of the few empirical applications of such models is the study by Rosenzweig and Wolpin (1993 Rosenzweig, MR and Wolpin, K. 1993. Credit market constraints, consumption smoothing, and the accumulation of durable production assets in low-income countries: investment in bullocks in India. Journal of Political Economy, 101: 223–44. [Crossref], [Web of Science ®] , [Google Scholar]) who conclude that Indian farmers in the ICRISAT villages would not benefit from the introduction of formal weather insurance. In this article we investigate how models such as theirs can be estimated from panel data on production and assets. We show that if assets can take only a limited number of values the coefficients of the model cannot be estimated with reasonable precision. We also show that this can affect the conclusion that insurance would not be welfare improving.