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Work in Progress

Unpublished papers and links. Many of these can be found on REPEC

Work in Progress: Text

Cloud Computing and Firm Growth (with Tim DeStefano and Jonathan Timmis) R&R Review of Economics and Statistics

The arrival of the cloud has enabled a shift in the nature of ICT use, from investment in sunk capital to a pay-on-demand service that allows firms to rapidly scale up. This paper uses new firm-level data to examine the impact of cloud on firm growth in the UK, using zipcode-level instruments of the timing of high-speed fibre availability and expected speeds. We find cloud leads to the growth of young firms in terms of employment and productivity, but they become more concentrated in fewer plants. For older firms we find no scale or productivity growth, but instead disperse activity by closing plants and moving employment further from the headquarters. In addition, the plants that close tend to be those without access to fibre broadband.

Work in Progress: Text

The effect of airports on the growth of service exports (with Danny McGowan)

This paper studies the causal effect of airports on the growth of service exports. We exploit the location of historic military-built airfields as instruments for the current stock of international airports across UK regions. The estimates show that an additional airport increases the growth rate of exports by 76% over an 8-year time period. Airports affect exports by increasing both the intensive and extensive margins. The evidence is consistent with airports improving market access and reducing fixed and variable trade costs. These results are robust to the addition of contemporaneous and historic controls and various falsification and robustness tests.

Work in Progress: Text

ICT and capital biased technical change (with Tim DeStefano and Jonathan Timmis)

Historical analysis of past general purpose technologies suggest that multi-factor productivity gains are realised through both labor and capital saving features from these technologies. In this paper, we explore for the first time whether ICT leads to capital saving, generated by squeezing a greater amount of economic activity into a smaller amount of space. To do so we use new regional data on building capital for the UK and cross-space and time variation in broadband connection speeds over an 18 year period. We find evidence of capital biased technical change, where the long-term effects of ICTs are linked to a reduction of the geographic footprint of businesses and these results are robust to wide-ranging robustness, falsification and endogeneity bias tests. The capital biased technical change effects of ICT provide a new perspective on the recent discussion about the ‘death of the high street’ and, as this type of capital is typically assumed to be constant, likely represents an aspect of TFP missing from estimates constructed at both the micro and macro level.

Work in Progress: Text

Capital incentives in the age of intangibles (with Tim DeStefano, Nick Johnstone  and Jonathan Timmis)

Cloud computing presents a significant change in the way firms access digital technology and enables data-driven business models. Now, firms can acquire their storage, processing and software needs as a cloud computing service rather than making upfront fixed cost investments in capital. Yet, policies that encourage digital diffusion are still targeted towards investment in physical IT capital. This paper exploits a UK tax incentive for capital investment to examine firm adoption of cloud computing and big data analytics. Using a quasi-natural experimental approach our empirical results show that the policy increased investment in IT capital and hardware as one would expect; but it reduced the adoption of cloud and big data analytics. The adverse effects of the policy on cloud and big data adoption are particularly pronounced for small firms. from estimates constructed at both the micro and macro level.

Work in Progress: Text

The Digital Divide: The Effect of Universal Broadband on Firm Performance (with Tim DeStefano and Jonathan Timmis) forthcoming in Journal of Economic Geography

Differences in access to high-speed broadband between urban and rural locations is known as the “digital divide”. In this paper we exploit geographical discontinuities in broadband availability across the UK to capture the causal effects on firms on both sides of this divide.  We find for urban firms that broadband causes an increase in their size, but not productivity. In contrast, in rural locations broadband has no significant effects on firm performance. Testing the robustness of these results, we exploit a historical accident whereby one rural region received broadband 5 years before surrounding areas. Again, the analysis finds no empirical evidence for the effects of broadband use on firm performance in rural localities.

Work in Progress: Text
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