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on Payment Systems and Financial Technology |
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Issue of 2022‒05‒02
twenty-one papers chosen by |
| By: | Franklin Allen; Xian Gu; Julapa Jagtiani |
| Abstract: | Fintech and decentralized finance have penetrated all areas of the financial system and have improved financial inclusion in the last decade. In this paper, we review the recent literature on fintech, cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs). There are important implications from the rise of fintech and the introduction of stablecoins and CBDCs in recent years. We provide an overview of China’s experience in fintech, focusing on payments, digital banking, fintech lending, and the recent progress on its CBDC pilots (e-CNY). We also discuss important considerations in designing effective cryptocurrency regulations. Cryptocurrency regulations could promote growth of innovations through enhanced public confidence in this market. The e-CNY could become mainstream in the global market through effective regulations, which provide incentives and protection to market participants. A key factor to success for digital currencies has been their widespread adoption. If the Chinese e-CNY were to become a mainstream currency, the introduction of CBDC could potentially offer solutions to existing problems inherent in traditional financial systems. |
| Keywords: | fintech; cryptocurrency regulations; stablecoins; CBDCs; e-CNY; China |
| JEL: | G21 G28 G18 L21 |
| Date: | 2022–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:93944&r= |
| By: | Daniela Balutel; Marie-Hélène Felt; Gradon Nicholls; Marcel Voia |
| Abstract: | Since 2016, the Bank of Canada has conducted annual surveys to monitor awareness, adoption and usage of Bitcoin and other cryptocurrencies (Henry et al. 2018, 2019a, 2019b). This report incorporates results from the 2019 Bitcoin Omnibus Survey and the November 2020 Cash Alternative Survey. We find that between 2018 and 2020, the level of Bitcoin awareness and ownership among Canadians remained stable: nearly 90% of the population were aware of Bitcoin, while only 5% owned it. We find that about half of Bitcoin owners stated they usually obtained their bitcoins through mobile or web exchanges, while one-fifth used mining. Bitcoin owners were susceptible to certain risks, as evidenced by the fact that about half of current and past owners stated they had been affected by events such as price crashes, losing access to funds, scams or data breaches. The most commonly cited reasons for owning Bitcoin were related to its use for investment or based on interest in the technology. Bitcoin owners displayed greater knowledge about the Bitcoin network than non-owners, yet they scored lower on questions testing financial literacy. |
| Keywords: | Bank notes; Digital currencies and fintech; Econometric and statistical methods |
| JEL: | E4 C12 O51 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocadp:22-10&r= |
| By: | Marcelo de A. Borges; Guido L. de S. Filho; Cicero Inacio da Silva; Anderson M. P. Barros; Raul V. B. J. Britto; Nivaldo M. de C. Junior; Daniel F. L. de Souza |
| Abstract: | This article describes a proposal to create a digital currency that allows the decentralized collection of resources directed to initiatives and activities that aim to protect the Brazilian Amazon ecosystem by using blockchain and digital contracts. In addition to the digital currency, the goal is to design a smart contract based in oracles to ensure credibility and security for investors and donors of financial resources invested in projects within the Standing Forest Coin (SFC - standingforest.org). |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.12600&r= |
| By: | Nora Andira Brabo (Budi Luhur University, Jl. Ciledug Raya, Petukangan Utara, 12260, Jakarta Selatan, Indonesia Author-2-Name: Andri Irmawan Karif Author-2-Workplace-Name: Budi Luhur University, Jl. Ciledug Raya, Petukangan Utara, 12260, Jakarta Selatan, Indonesia Author-3-Name: Setyani Dwi Lestari Author-3-Workplace-Name: Budi Luhur University, Jl. Ciledug Raya, Petukangan Utara, 12260, Jakarta Selatan, Indonesia Author-4-Name: Agus Sriyanto Author-4-Workplace-Name: Budi Luhur University, Jl. Ciledug Raya, Petukangan Utara, 12260, Jakarta Selatan, Indonesia Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | "Objective - Brand Xiaomi launched its first smartphone in 2011 and in 2019, Xiaomi become the 4th largest smartphone manufacturer in the world. This extraordinary achievement has brought questions about how their product is marketed and promoted and how consumers are persuaded to buy their products. This study aims to analyze factors that influence consumers purchase intentions in relation to Xiaomi smartphones. The context of the analysis in this study is social media platform, namely Xiaomi official fan page in Facebook, Twitter and Instagram in Indonesia. Methodology/Technique - A survey method is conducted and the respondents were chosen using non-probability sampling with convenience technique. Data wasanalyzed using Structure Equation Model (SEM) with smart PLS (Partial Least Square) software version. Findings - The results show that Brand Page Commitment, Brand Awareness, Electronic WOM, and Brand Image have a significant positive influence on purchase intention for Xiaomi smartphones.Brand Page Commitment of Xiaomi social media has an impact on eWOM, brand image and also consumer purchase intention. Creative content isneeded to keep customers engaged and committed to the Xiaomi social media platforms, such as photo competitions with Xiaomi cameras. Social media allows consumers to post user-generated content (such as online comments, product reviews), thus allow consumers spread the word-of mouth about the product digitally. Novelty - Social media also allowscompanies to have conversations with consumers responding to those who reach out to Xiaomi Brand page through commenting or messaging. Through their Brand Page, a company can execute social media strategies and, if done correctly, it will increase Xiaomi brand image and sales. Type of Paper - Empirical" |
| Keywords: | Brand Page Commitment; Brand Awareness; Electronic WOM; Brand Image; Purchase Intention |
| JEL: | M30 M39 |
| Date: | 2021–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jmmr285&r= |
| By: | Shah, Anand |
| Abstract: | Valuation of tokens is a wager on the platform adoption. This study investigates the effect of platform adoption on the valuation of loyalty tokens and the contingent claims with the token as an underlying. The platform adoption is modelled using the classical Bass Model. The example selected is that of airmiles, but the approach could be extended to loyalty token with other numeraires as well. After assuming few monetary policy rules for the platform governance, the proposed simple model predicts that the Bass Model parameters could have significant influence on the valuation of loyalty tokens and the contingent claims with the token as an underlying. |
| Keywords: | Tokenomics, Cryptocurrencies, Initial Coin Offering (ICO), Blockchain applications, Bass Model, Option pricing with Bass Model parameters |
| JEL: | E42 G12 G13 L86 |
| Date: | 2022–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111986&r= |
| By: | José Alves; João Quental Gonçalves |
| Abstract: | The present work offers a review on two divergent schools of thought regarding the subject of money and highlights why understanding it is important to grasp the workings and nature of the concept of money. We adopt a spontaneous order perspective on social institutions, considering money as one. Such framework allows for the construction of axioms from which we formulate our problem allowing us to ask how old forms of money such as Gold and Silver hold up in today’s world regarding their hedging properties. Moreover, we also do so for Bitcoin since we consider it an appropriate asset due to its specific characteristics and its (at the time of writing) more than 10-year life span. We resort to the Autoregressive Distributed Lag (ARDL) methodology in order to study our three assets in the context of the US dollar and the US Economy for two different time periods. We analyse price dynamics from 1980 to 2020 for gold and silver resorting to annual data. Regarding bitcoin we employ quarterly data from 2009 to 2020. We conclude that the theories that explain what money is, how it comes to be so and how certain types of “money assets” may serve both as an indirect hedge against inflation in the two interpretations of the word and as a “stock of value” have merits that might deserve further investigation. . |
| Keywords: | money, inflation, gold, silver, bitcoin |
| JEL: | B25 D46 E42 E51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9662&r= |
| By: | Xiaotong Sun |
| Abstract: | Though blockchain aims to alleviate bribing attacks, users can collude with miners by directly sending bribes. This paper focuses on empirical evidence of bribes to miners, and the detected behaviour implies that mining power could be exploited. By scanning transactions on Ethereum, transactions for potential direct bribes are filtered, and we find that the potential bribers and bribees are centralized in a small group. After constructing proxies of active level of potential bribing, we find that potential bribes can affect the status of Ethereum and other mainstream blockchains, and network adoption of blockchain can be influenced as well. Besides, direct bribes can be related to stock markets, e.g., S&P 500 and Nasdaq. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.14601&r= |
| By: | Ho Sew Tiep (Multimedia University, Jalan Ayer Keroh Lama, 75450, Melaka, Malaysia Author-2-Name: Goh Mei Ling Author-2-Workplace-Name: Multimedia University, Jalan Ayer Keroh Lama, 75450, Melaka, Malaysia Author-3-Name: Radziah Shaikh Abdullah Author-3-Workplace-Name: Multimedia University, Jalan Ayer Keroh Lama, 75450, Melaka, Malaysia Author-4-Name: Teo Kim Mui Author-4-Workplace-Name: Multimedia University, Jalan Ayer Keroh Lama, 75450, Melaka, Malaysia Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - The research aims to investigate Malaysian tertiary students' intention towards waste mobile phone recycling in the context of an integrated model. Methodology - Awareness of consequences, attitude, subjective norm, perceived convenience, and perceived knowledge were hypothesised to investigate mobile phone recycling intention among university students. For this study, 294 university students were recruited using convenience sampling. Data were gathered using a series of self-administered questionnaires. All instruments for the variables were adopted from past studies. Partial least square structural equation modeling (PLS-SEM) was conducted to evaluate the measurements' validity and examine the relationship among variables. Findings - Convergent validity and discriminant validity evaluated using the measurement model were satisfactory. The R-squared value obtained was 0.363, which suggests that the model explained 36.3% of students' intention towards mobile phone recycling. The results suggest that attitude is the important determinant of e-waste recycling intention. Perceived convenience, subjective norm, and awareness of consequences also emerge as significant variables affecting waste mobile phones recycling intention. Interestingly, perceived knowledge is not a significant factor in this analysis. Novelty - This study provides an insight into the complex relationships that affect the waste mobile phones recycling intentions of users as well as well-founded suggestions for the policymakers in the future. Type of Paper - Empirical" |
| Keywords: | Determinants; Mobile Phones; Electronic Waste; Recycling; Intention; University Students |
| JEL: | A1 Q53 |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jber216&r= |
| By: | Danila, Marius |
| Abstract: | Current efforts to implement a digital euro protect Europe's autonomy and are a guarantee that some undesirable scenarios could materialize. Such scenarios are not imminent, but both the population and companies must be able to rely on the fact that the responsible authorities are aware of and carefully analyze such dangers and challenges and also have a proactive approach from an early stage. As preparations for the digital euro progress, the views of the public, companies, banks and all stakeholders will be extremely important to ensure that a digital euro is optimally designed and adds value to European society. It is the duty of all of us to help ensure that the regulatory and supervisory framework at EU level remains appropriate. |
| Keywords: | Euro, currency, digital currency, central bank |
| JEL: | E42 G15 |
| Date: | 2021–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112615&r= |
| By: | Martin Peitz; Lily Samkharadze |
| Abstract: | Platform competition can be intense when offering non-differentiated services. However, competition is somewhat relaxed if platforms cannot set negative prices. If platforms collude they may be able to implement the outcome that maximizes industry profits. In an infinitely repeated game with perfect monitoring, this is feasible if the discount factor is sufficiently large. When this is not possible, under some condition, a collusive outcome with one-sided rent extraction along the equilibrium path can be sustained that leads to higher profits than the non-cooperative outcome. |
| Keywords: | Two-sided markets, tacit collusion, cartelization, price structure, platform competition |
| JEL: | L41 L13 D43 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2022_331v2&r= |
| By: | Shota Ichihashi; Byung-Cheol Kim |
| Abstract: | We study competition for consumer attention, in which platforms can sacrifice service quality for attention. A platform can choose the “addictiveness” of its service. A more addictive platform yields consumers a lower utility of participation but a higher marginal utility of allocating attention. We provide conditions under which increased competition can harm consumers by encouraging platforms to offer low-quality services. In particular, if attention is scarce, increased competition reduces the quality of services because business stealing incentives induce platforms to increase addictiveness. Restricting consumers’ platform usage may decrease addictiveness and improve consumer welfare. A platform’s ability to charge for its service can also decrease addictiveness. |
| Keywords: | Economic models |
| JEL: | D40 L51 |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:22-16&r= |
| By: | Richard Fedorko (Faculty of Management, University of Presov, 08001, Presov, Slovak republic Author-2-Name: Veronika Skerhakova Author-2-Workplace-Name: Faculty of Management, University of Presov, 08001, Presov, Slovak republic Author-3-Name: Radovan Bacík Author-3-Workplace-Name: Faculty of Management, University of Presov, 08001, Presov, Slovak republic Author-4-Name: Viktoria Ali Taha Author-4-Workplace-Name: Faculty of Management, University of Presov, 08001, Presov, Slovak republic Author-5-Name: Denis Tirpak Author-5-Workplace-Name: Faculty of Management, University of Presov, 08001, Presov, Slovak republic Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | "Objective - The paper focuses on the identification and specification of the Y and Z Generation online consumer behaviour and analysis of factors affecting the frequency of online shopping for young Slovak consumers. The aim of this paper is to identify the factors affecting the frequency of online shopping among Millennials and Post-Millennials consumers. Methodology - The primary data collection was done by the self-administrated questionnaire and involved 758 respondents from the Slovak republic. The method of ordinal logistic regression was applied with the focus on the 45 factors influencing the frequency of online shopping were examined within two models. Findings - The results of the research on the online shopping consumer attributes revealed 13 statistically significant factors affecting the frequency of online shopping. Novelty - The attention is focused on the impact of individual characteristics of respondents, their online consumer attributes, their attitudes towards online shopping, financial risk perception, the impact and perception of promotion on their purchasing decisions, perception of the importance of guaranteeing risk-free online shopping, product range offer, and individual characteristics of an e-shop. Type of Paper - Empirical" |
| Keywords: | Millennials; Post-Millennials; frequency of online shopping; e-commerce; consumer behaviour |
| JEL: | M31 M39 |
| Date: | 2022–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jber219&r= |
| By: | Janos Ferencz; Javier López González; Irene Oliván García |
| Abstract: | Artificial intelligence (AI) has strong potential to spur innovation, help firms create new value from data, and reduce trade costs. Growing interest in the economic and societal impacts of AI has also prompted interest in the trade implications of this new technology. While AI technologies have the potential to fundamentally change trade and international business models, trade itself can also be an important mechanism through which countries and firms access the inputs needed to build AI systems, whether goods, services, people or data, and through which they can deploy AI solutions globally. This paper explores the interlinkages between AI technologies and international trade and outlines key trade policy considerations for policy makers seeking to harness the full potential of AI technologies. |
| Keywords: | Data flows, Digital trade, Innovations, Regional Trade Agreements, Trade policy |
| JEL: | F13 F14 O33 |
| Date: | 2022–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:260-en&r= |
| By: | Richard Fedorko (University of Pre�ov, Faculty of Management, Pre�ov, Slovakia, Kon�tant�nova 16, 08001 Author-2-Name: Ludov�t Nasti�in Author-2-Workplace-Name: University of Pre�ov, Faculty of Management, Pre�ov, Slovakia, Kon�tant�nova 16, 08001 Author-3-Name: Radovan Bac�k Author-3-Workplace-Name: University of Pre�ov, Faculty of Management, Pre�ov, Slovakia, Kon�tant�nova 16, 08001 Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - In the current time of pandemic crisis, social media is one of the most effective tools for ecommerce to keep in touch with customers. One of the most affected segments worldwide is undoubtedly the tourist segment. Our goal was to examine the perception of selected aspects of social media in the light of gender differences during a pandemic in the tourist segment, when these can convince or discourage the customer to buy. Methodology/Technique - Data collection took place from the beginning of 2021 and lasted 3 months. It was an online questionnaire and focused on customers of travel agencies. A total of 723 valid responses were collected. These were analyzed for statistical significance of gender differences using SPSS software. Findings - The results identified significant differences in perceptions between men and women in some of the areas examined. The best forms of content that work best on these platforms have been identified. Attitudes towards communication through social media for marketing purposes were also identified. These were perceived positively in order to support purchasing decisions. We also identified a great need for personalization in communication via social media in a given tourist segment. Novelty - All findings show great implication potential for both theory and practice. The pandemic situation has changed market conditions and many of these changes will persist beyond. There is therefore a need to examine these contexts in the future. Managers in the tourism segment are able to incorporate the identified results into the way they manage their online activities and manage their social media. Type of Paper - Empirical" |
| Keywords: | Social Media; Ecommerce; Tourism; Pandemic; Differences; Analysis. |
| JEL: | M31 M39 |
| Date: | 2021–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jmmr286&r= |
| By: | Jeremy Galpin |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:img:wpaper:58&r= |
| By: | Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Yasmine Elkhateeb (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Cairo University); Mathilde Maurel (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique, FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | This paper investigates the impact of internet use as a means of accessing news on African citizens' demand for and perception of the supply of democracy. This question is addressed using cross-sectional data from the last three rounds of the Afrobarometer survey for a sample of 25 African countries between 2011 and 2018. Using an instrumental variable approach to control for the possible endogeneity bias between internet use and citizens' perceptions, we found that using the internet to get news has a negative and significant effect on the demand for and on the perceived supply of democracy. The negative effect is channeled through two main factors. The first factor is the confidence in governments and governmental institutions, which is undermined by the use of the internet. In particular, we find that this internet-induced lower confidence translates into a higher probability of engaging in street protests instead of increased political participation. The second driving factor is the (mis-)information channel. On the one hand, we show that internet users' perception of the supply of democracy negatively diverges from experts' ratings. On the other hand, we document further that internet use increases the likelihood of incoherence in the respondent's stance about her demand for democracy. Finally, we show that the negative effect we found is mitigated when the internet is complemented by traditional media sources, especially the radio, to get informed. The findings of this study suggest that internet use is not neutral and tends to undermine citizens' preferences for democracy and alter perceptions about the functioning of political institutions. |
| Keywords: | Internet news,democracy,Africa |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-03628023&r= |
| By: | Kao, Andrew; Genakos, Christos; Kretschmer, Tobias |
| Abstract: | Do firms strategically confuse their customers? Using a detailed dataset covering virtually all mobile phone tariffs and their handsets in the UK between January 2010 and September 2012, we examine the co-evolution of prices with the differentiation and overlap of operators' product portfolios. Incorporating the fact that mobile tariffs are multidimensional and hard to compare but easy to imitate and cheap to launch, we argue that firms introduced a large number of dominated tariffs as an obfuscation strategy. We show that the increase in dominated tariffs correlates with the increase in average prices despite converging product portfolios. This exploratory study is one of the first to offer suggestive evidence of the existence and role of obfuscation as a firm strategy. |
| Keywords: | words; competitive strategy; obfuscation; mobile telecommunications industry |
| JEL: | L10 L20 L96 |
| Date: | 2021–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:113835&r= |
| By: | Berg, Holger; Kulinna, Raik; Stöcker, Carsten; Guth-Orlowski, Susanne; Thiermann, Ricky; Porepp, Natalie |
| Abstract: | This paper analyses the potential of digital information technology to enable the reliable provision of product information along the plastics supply chain. The authors investigate the possible contribution of a product passport equipped with decentralised identifiers and verifiable credentials to overcome information deficits and information asymmetry in the circular plastics economy. Through this, high-quality plastics recycling could be enabled on a larger scale than currently possible. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wuppap:197&r= |
| By: | Ozan Candogan; Nicole Immorlica; Bar Light; Jerry Anunrojwong |
| Abstract: | Individuals increasingly rely on social networking platforms to form opinions. However, these platforms typically aim to maximize engagement, which may not align with social good. In this paper, we introduce an opinion dynamics model where agents are connected in a social network, and update their opinions based on their neighbors' opinions and on the content shown to them by the platform. We focus on a stochastic block model with two blocks, where the initial opinions of the individuals in different blocks are different. We prove that for large and dense enough networks the trajectory of opinion dynamics in such networks can be approximated well by a simple two-agent system. The latter admits tractable analytical analysis, which we leverage to provide interesting insights into the platform's impact on the social learning outcome in our original two-block model. Specifically, by using our approximation result, we show that agents' opinions approximately converge to some limiting opinion, which is either: consensus, where all agents agree, or persistent disagreement, where agents' opinions differ. We find that when the platform is weak and there is a high number of connections between agents with different initial opinions, a consensus equilibrium is likely. In this case, even if a persistent disagreement equilibrium arises, the polarization in this equilibrium, i.e., the degree of disagreement, is low. When the platform is strong, a persistent disagreement equilibrium is likely and the equilibrium polarization is high. A moderate platform typically leads to a persistent disagreement equilibrium with moderate polarization. Lastly, more balanced and less polarized initial opinions are more likely to lead to persistent disagreement than to consensus. |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2202.12453&r= |
| By: | Bloom, Nicholas; Hassan, Tarek Alexander; Kalyani, Aakash; Lerner, Josh; Tahoun, Ahmed |
| Abstract: | We identify novel technologies using textual analysis of patents, job postings, and earnings calls. Our approach enables us to identify and document the diffusion of 29 disruptive technologies across firms and labor markets in the U.S. Five stylized facts emerge from our data. First, the locations where technologies are developed that later disrupt businesses are geographically highly concentrated, even more so than overall patenting. Second, as the technologies mature and the number of new jobs related to them grows, they gradually spread across space. While initial hiring is concentrated in high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology. At the same time, the geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades. Finally, these technology hubs are more likely to arise in areas with universities and high skilled labor pools. |
| Keywords: | disruptive technologies; firms; labor markets |
| JEL: | R14 J01 J1 |
| Date: | 2021–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:113870&r= |
| By: | Harshil Sahai; Mike Bailey |
| Abstract: | This paper studies the role of social networks in spatial mobility across India. Using aggregated and de-identified data from the world's largest online social network, we (i) document new descriptive findings on the structure of social networks and spatial mobility in India; (ii) quantify the effects of social networks on annual migration choice; and (iii) embed these estimates in a spatial equilibrium model to study the wage implications of increasing social connectedness. Across millions of individuals, we find that multiple measures of social capital are concentrated among the rich and educated and among migrants. Across destinations, both mobility patterns and social networks are concentrated toward richer areas. A model of migration suggests individuals are indifferent between a 10% increase in destination wages and a 12-16% increase in destination social networks. Accounting for networks reduces the migration-distance relationship by 19%. In equilibrium, equalizing social networks across locations improves average wages by 3% (24% for the bottom wage-quartile), a larger impact than removing the marginal cost of distance. We find evidence of an economic support mechanism, with destination economic improvements reducing the migration-network elasticity. We also find suggestive evidence for an emotional support mechanism from qualitative surveys among Facebook users. Difference-in-difference estimates suggest college attendance delivers a 20% increase in network size and diversity. Taken together, our data suggest that - by reducing effective moving costs - increasing social connectedness across space may have considerable economic gains. |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2203.05595&r= |