Does computer penetration increase farmers' income? An empirical study from China. (June 2018)

• Record Type: Journal Article
• Authors: Gao, Yanyan; Zang, Leizhen; Sun, Jun
• Is Part Of: Telecommunications policy. Volume 42:Number 5(2018)
• Page Start: 345
• Page End: 360
• Publication Date: 2018-06
• Subjects: Computer penetration -- Digital divide -- Rural residents' income -- Instrument variables -- China -- Dynamic panel threshold effects model; L96 -- L86 -- L38 -- O18 -- P25; Telecommunication -- Periodicals; Télécommunications -- Périodiques; 384
• DOI: 10.1016/j.telpol.2018.03.002
• Languages: English
• ISSNs: 0308-5961

Abstract

Abstract: The diffusion and adoption of modern information technology provide new chance for China to close urban-rural income gap. This paper uses China's provincial panel data from 2002 to 2013 to investigate the effect of computer penetration on rural residents' income. A public program aiming to connect every village with broadband Internet and other rural facilities provides plausibly exogenous variation in rural residents' availability and adoption of the broadband Internet, which is used to explore the instrument variable for rural computer penetration. The results show that rural computer penetration tends to increase rural residents' income over time, but the average effect remains limited. The dynamic panel threshold effects model, which allows for both the threshold variable and other covariates to be endogenous, is further used to explore the constraints of the income-increase effect of rural computer penetration. It shows that the effect is at least doubled over the average effect estimated from instrument variables method, once the digital divide causes are removed. Our findings have important implications for the government to increase rural residents' income and reduce urban-rural income gap by encouraging rural computer usage and removing the digital divide. Highlights: Provincial Panel Data are used to estimate the effect of rural computer penetration on farmers' income in China. Both the Instrumental variables method and dynamic panel threshold effects model are used to address the endogeneity issue. Rural computer penetration increases farmers' income. The income increase effect is constrained by the digital divide causes.