Impact d'Internet sur les exportations et les salaires

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Global theme: International Economics and Innovation

Research question: How the spread of the Internet impact wages and exports growth in the US between 2000 and 2010?

Project from: Justine Bouguennec, Osman Toygar, Tanguy Nana

Abstract - The purpose of our study is to study the link between the development of the Internet and the US economy over the period 2000 to 2010. We first wanted to explain the impact of the Internet on the wages of American workers. Then, in order to explain a more explicit impact of the development of the Internet on the American economy we have studied its link with exports.

To conduct our two different but implicitly related analyzes, we started from the idea that the Internet has had a positive impact on the economy in terms of productivity gains.

We observe then that the distribution of its gains was mainly felt in the least developed zones, whether in terms of wages or exports.

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🡪 Internet broadcasting throughout the US between 2000 and 2010 (in terms of
Internet users)

I-Introduction

The first huge information technology innovation concerns the Internet. This computer network has been created in the early 1960, but became accessible to a large audience in the 1990. Since almost three decades, Internet leads to several applications. These new technologies have largely contributed to changes at the scale of the world economy.
In this paper, we are going to focus over the impact that they may have induced, especially over wages and exportations growth over the period 2000 to 2010 in the US.

First, we choose to focus on this period because it was marked by important information technology investment. In particular ADSL broadband, cable and optical fiber in very high speed are investments that have been made over the beginning of the 21st century.
Moreover, the decade has been marked by the proliferation of media where the Internet has become greatly accessible. Consequently, Internet uses has sharply increased over the past decade becoming widespread across US territory. For instance, the Google search engine and its applications (maps, mail, youtube), the social network Facebook or a lot of e-commerce platform (on the top of them Amazon) has clearly contributed to increase internet uses. and similarly the success of these firms has been made possible by the Internet. For all these reasons, we think that internet may have several consequences on the economy and on trade.

Secondly, we will focus on impact over wages because we want to know if the distribution of presumed gains from increasing productivity in working areas benefits to workers. Especially we want to know if this gain was homogenous. Then, we will add exportations in our work, to see how internet may be relevant to explain exports growth.
After doing these two regression we are trying to explain the link between the three variables by answering the following question :

How the spread of the Internet impact wages and exports growth in the US between 2000 and 2010?

We will stop in 2010, especially because after this year the missing data are more important.

We choose to focus over the US and the differences observed between states. In fact, generally, a lot of new technologies investments are coming from the US. The diffusion of the effects related to these investments is mainly felt initially in the United States. Thus, the data collected in the US will traduce earlier the impact of Internet investments than the other countries. Also, knowing the fact that USA is a country that hides significant disparities in income, suggests that a state-by-state analysis may be relevant.
























II. Literature Review :

In this literature review, we reports some paper analysis that proved some findings on which we will built our analysis.

First, several studies have attempted to explain the link between the Internet and wages.

On the one hand, relationship between internet investment and wage growth has been studied in the US between 1995 and 2000 (Chris Forman, Avi Goldfarb and Shane Greenstein 2012). The results showed that Internet investments are correlated with wage growth mainly in the most affluent areas (counties) in the US. They consider the most affluent areas to be those in the top quartile of distribution in terms of population, income, education, but also where the most important investors in terms of information technology are. Thus, while the spread of the Internet has been widespread in the United States, only these areas have experienced wage growth and this reinforced wages inequality.
On the other hand, other papers^[1] present several trends and empirical evidence on growth wage and technology. First, they empirically show that even if wages inequalities started in the US and UK at the end of the 1970s, those inequalities are now widespread on their territory. From a theoretical point of view, a good fraction of this inequalities is due to technology: It’s actually pointing out a strong evidence that skill biased technical change has maintained upward pressure on the demand for the most highly educated workers. Consequently, new technologies investments create a shift in demand towards the skilled workers.

Secondly, at the macroeconomic level, a country's level of internet access is positively correlated with an increase in exports of goods, particularly for developing countries exporting to developed nations. (Clarke and Wallsten, 2006).
Furthermore, Internet diffusion may have contributed to trade intensification : Indeed, broadband internet is perceived as a reduction of information frictions that suffer most of economic relations. For example, Friedman (2005) prophesies the "death of distance" and explains that new information technologies are making traditional obstacles to the exchange of ideas and goods obsolete.

In a study based on individual data from Norwegian companies, no direct effect of high-speed internet access was found on firms' trade (Akerman et al, 2018). Still, they have shown that ADSL increases the sensitivity of international trade to the distance between importing and exporting countries, as well as the sensitivity to the economic weight of their markets. As a result, ADSL would alter the geography of international trade because of a reduction in information frictions.  This point of view is disputed by economists today, according to which the importance of physical distance for trade would decrease little despite the spread of information and communication technologies (Disdier and Head, 2008). Thus, the question of the impact of high-speed internet broadcasting on international trade remains relevant.

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