Four essays on technology adoption and returns to skill in the US

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2005-01-01
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Song, Moohoun
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Peter F. Orazem
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Economics

The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).

History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.

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1898–present

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  • Department of Economic Science (1898–1910)
  • Department of Economics and Political Science (1910-1913)
  • Department of Applied Economics and Social Science (1913–1924)
  • Department of Economics, History and Sociology (1924–1931)
  • Department of Economics and Sociology (1931–1967)

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We investigate two plausible factors that may have affected changes in wage inequality: returns to higher education and returns to new technologies. The first two chapters examine the role of mathematics and verbal ability in estimating returns to advanced degrees. When average abilities within the major are treated as missing variables, we found that OLS estimates of returns to graduate education are underestimated. When average ability in the major is treated as part of an endogenous decision regarding whether to attend post-graduate degree programs, we find that students in majors with higher average mathematics skills are less likely to progress beyond the bachelor's degree while the opposite happens with average verbal skills.;The next two chapters examine the decision of whether to adopt Internet and computer technologies and the returns to adoption. We first identify demand-side and supply-side factors that affect technology adoption in urban and rural areas. Local access to high speed Internet plays an important role in the technology adoption decision. It increases the probability of using computers and the Internet for work from home and also increases the likelihood of using the Internet at work. That factor alone explains about half of the gap in Internet adoption at home or at work between urban and rural workers. Together, the demand and supply-side factors identified in the analysis completely explain the differences in technology adoption between urban and rural areas.;Using the previous model to identify the endogenous probability of adopting various information technologies, we estimate returns to adoption in the context of an earnings function. When treated as exogenous, adoption has an implausibly large positive and significant effect on earnings. When the endogeneity of the choice to adopt is controlled, the estimated returns to adoption shrink in both sign and significance. Thus, while adoption is strongly tied to the availability of high-speed Internet in the home county, the higher income of adopters is due to factors that raise both the probability of adoption and earnings and not to the adoption per se.

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Sat Jan 01 00:00:00 UTC 2005