Friday, 23 October 2015

Various teaching links: broadband and innovation

1. Broadband raises productivity and demand for the skilled, lowers for the unskilled (Quarterly Journal of Economics (2015), 1781–1824).

This is an interesting paper that uses matched employee and employer data for Norway, using variation in Broadband availability across regions to measure the broadband effects on various meaures, including skilled and unskilled output elasticities.   Broadband lowers (raises) the output elasticity of the unskilled (skilled) with an overall effect on total factor productivity of (p.1809) a 10 point rise in availability of 0.4%.  The overall change in availability is a bit hard to see, but figure 1 suggests that most areas of Norway had zero availability in 2001 but 75% or above in 2005.  So if availability rose by, say 80 percentage points in 4 years, roughly TFP rose by 0.8% per year.


Update.
A new paper by Rosa Sanchis and co-authors does not however find such good results for Broadband speed on learning by kids.(summary here)

The abstract
Governments are making it a priority to upgrade information and communication technologies (ICT) with the aim to increase available internet connection speeds. This paper presents a new empirical strategy to estimate the causal effects of these policies, and applies it to the questions of whether and how ICT upgrades affect educational attainment. We draw on a rich collection of microdata that allows us to link administrative test score records for the population of English primary and secondary school students to the available ICT at their home addresses. To base estimations on exogenous variation in ICT, we notice that the boundaries of usually invisible telephone exchange station catchment areas give rise to substantial and es-
sentially randomly placed jumps in the available ICT across neighboring residences. Using this design across more than 20,000 boundaries in England, we find that even very large changes in available broadband connection speeds have a precisely estimated zero effect on educational attainment. Guided by a simple model we then bring to bear additional microdata on student time and internet use to quantify the potentially opposing mechanisms underlying the zero re-duced form effect. While jumps in the available ICT appear to increase student consumption of online content, we find no significant effects on student time spent studying online or offline, or on their learning productivity.



2. McKinsey have a new report on China Innovation.  They focus on innovation, measured by TFP growth, this from the Executive Summary.

Without labor force expansion and investment to propel growth, China must rely more
heavily on innovation that can improve productivity. We use multifactor productivity—growth that does not come from factors of production such as labor and capital investment—as a proxy for the macroeconomic impact of innovation broadly defined (including productivity gain from catch-up). The contribution to GDP of multifactor productivity has been falling in China, from nearly half of yearly GDP growth in the 1990 to 2000 decade to 30 percent in the past five years. To reach the growth target of 5.5 to 6.5 percent per year (the current consensus view from five leading economic institutions), multifactor productivity growth will need to contribute 35 to 50 percent of GDP growth, or two to three percentage points per year of GDP (Exhibit E1).





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