nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2016‒05‒08
five papers chosen by
Walter Frisch
Universität Wien

  1. Returns To ITC Skills By Oliver Falck; Alexandra Heimisch; Simon Wiederhold
  2. How to Catch a Unicorn: An exploration of the universe of tech companies with high market capitalisation By Jean Paul Simon
  3. When private information settles the bill: Money and privacy in Google's market for smartphone applications By Kummer, Michael E.; Schulte, Patrick
  4. Industrial Penetration and Internet Intensity By Chia-Lin Chang; Michael McAleer; Yu-Chieh Wu
  5. Does ICT Development Flatten the Globe? Evidence from International Trade Costs Data By Keita, Moussa

  1. By: Oliver Falck; Alexandra Heimisch; Simon Wiederhold
    Abstract: How important is mastering information and communication technologies (ICT) in modern labour markets? We present the first evidence on this question, drawing on unique data that provide internationally comparable information on ICT skills in 19 countries from the OECD Programme for the International Assessment of Adult Competencies (PIAAC). Our identification strategy relies on the idea that Internet access is important in the formation of ICT skills, and we implement instrumental-variable models that leverage exogenous variation in Internet availability across countries and across German municipalities. ICT skills are substantially rewarded in the labour market: returns are at 8% for a onestandard- deviation increase in ICT skills in the international analysis and are almost twice as large in Germany. Placebo estimations show that exogenous Internet availability cannot explain numeracy or literacy skills, suggesting that our identifying variation is independent of a person’s general ability. Our results further suggest that the proliferation of computers complements workers in executing abstract tasks that require ICT skills. Quelle est l'importance de la maîtrise des technologies de l’information et de la communication (TIC) sur les marchés du travail modernes ? Nous présentons ici les premières réponses à cette question, à partir de données uniques offrant des informations comparables à l’échelle internationale sur les compétences en TIC dans 19 pays. Notre stratégie d'identification repose sur l'idée que l'accès à Internet joue un rôle important dans la formation des compétences en TIC, et nous appliquons des modèles à variables instrumentales utilisant la variation exogène de l’accès à Internet entre les pays et entre différentes municipalités allemandes. Les compétences en TIC font l’objet d’une reconnaissance substantielle sur le marché du travail : les rendements s’établissent ainsi à 8 % pour une augmentation d'un écart-type des compétences en TIC dans l'analyse internationale et sont presque deux fois plus élevés en Allemagne. Des estimations placebo montrent qu’un accès exogène à Internet ne constitue pas un facteur explicatif des compétences en numératie ou en littératie, semblant indiquer que notre identification d’une variation est indépendante des aptitudes générales des individus. Nos résultats suggèrent en outre que la multiplication du nombre d’ordinateurs assiste les travailleurs dans l'exécution de tâches abstraites nécessitant des compétences en TIC.
    Keywords: earnings, international comparisons, ICT skills, broadband
    JEL: J31 K23 L96
    Date: 2016–05–05
  2. By: Jean Paul Simon
    Abstract: Technology companies with high market capitalisation (often called unicorns) have been receiving a lot of attention and media coverage recently. In general, unicorns are IT-centric (software mostly, but also hardware). They are often rather young global companies that match unsatisfied demand with supply through the production (which can easily be scaled up) of innovative and usually affordable services and products. These are usually part of the mobile internet wave, and rely on connectivity (high speed networks, mobile and fixed), new devices (smartphones, tablets, phablets…) and the opportunities these bring. They are grounded in network effects, and demand-side economies of scale and scope. They depend on a strong favourable business environment, developing organically and building on fast expanding markets (emerging economies, middle classes). They are Venture Capital-dependent and the competition for funding can generate impressive (i.e. inflated) valuations. These companies can be disruptive for other sectors and firms. This report aims to document the phenomenon by investigating a qualitative sample of 30 companies that have recently been valued above the one billion dollar threshold. It identifies some of their characteristics and the lessons to be learnt. The report has two parts: Part I contains the overall findings of the investigation and some suggestions for policy makers. Part II contains a detailed account of the case studies on which the investigation is based. They are published as separate documents
    Keywords: IT industry, technology, innovation, market capitalisation
    JEL: L00 L1 L2 L8 O3
    Date: 2016–04
  3. By: Kummer, Michael E.; Schulte, Patrick
    Abstract: We shed light on a money-for-privacy trade-off in the market for smartphone applications ("apps"). Developers offer their apps cheaper in return for greater access to personal information, and consumers choose between lower prices and more privacy. We provide evidence for this pattern using data on 300,000 mobile applications which were obtained from the Android Market in 2012 and 2014. We augmented these data with information from and Amazon Mechanical Turk. Our findings show that both the market's supply and the demand side consider an app's ability to collect private information, measured by their use of privacy-sensitive permissions: (1) cheaper apps use more privacy-sensitive permissions; (2) installation numbers are lower for apps with sensitive permissions; (3) circumstantial factors, such as the reputation of app developers, mitigate the strength of this relationship. Our results emerge consistently across several robustness checks, including the use of panel data analysis, the use of selected matched "twin"-pairs of apps and the use of various alternative measures of privacy-sensitiveness.
    Keywords: Privacy,Mobile Applications,Android,Permissions,Supply and Demand of Private Information
    JEL: D12 D22 L15 L86
    Date: 2016
  4. By: Chia-Lin Chang (National Chung Hsing University, Taichung, Taiwan); Michael McAleer (National Tsing Hua University, Taiwan; Erasmus University Rotterdam, the Netherlands, and Complutense University of Madrid, Spain); Yu-Chieh Wu (National Chung Hsing University, Taichung, Taiwan)
    Abstract: This paper investigates the effect of industrial penetration and internet intensity for Taiwan manufacturing firms, and analyses whether the relationships are substitutes or complements. The sample observations are based on 153,081 manufacturing plants, and covers 26 two-digit industry categories and 358 geographical townships in Taiwan. The Heckman selection model is used to accommodate sample selectivity for unobservable data for firms that use the internet. The empirical results from two-stage estimation show that: (1) a higher degree of industrial penetration will not affect the probability that firms will use the internet, but will affect the total expenditure on internet intensity; (2) for two-digit industries, industrial penetration generally decreases the total expenditure on internet intensity; and (3) industrial penetration and internet intensity are substitutes.
    Keywords: Industrial penetration; Internet intensity; Sample selection; Incidental truncation
    JEL: D22 L60
    Date: 2016–04–25
  5. By: Keita, Moussa
    Abstract: This study attempts to bring new perspectives on the death of distance hypothesis by examining to what extent the intensification of ICT has contributed to attenuate the effect of distance on international trade issues. Our analysis is based on an extended gravity model constituted of 2827 country pairs observed from 2002 to 2012. The model is estimated by using the Hausman-Taylor instrumental variable approach to deal with specificities of the panel gravity models that cannot be treated in classical fixed-effect or random-effect models. The estimations confirm significant beneficial effects of ICT regarding trade costs reduction. We found that bilateral trade costs are significantly low between countries that have a more densified communication network. And this effect appears to be strongly heterogeneous regarding the distance. In particular, we found that the impact of ICT on trade costs is greater when the distance between the trading partners is more important. We also found that the elasticity of trade costs to distance decreases as the level of ICT increases. These results appear robust to various sensitivity and robustness checks and are consistent with other studies. Finally, the results obtained in this study suggest the existence of strong distance-neutralizing effect of ICT.
    Keywords: ICT, Distance, Trade, Trade costs, infrastructure, Gravity model.
    JEL: F14 O33
    Date: 2016–04

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