Disentangling income and price effects in the demand for time online

González Chapela, Jorge (2014): Disentangling income and price effects in the demand for time online.

Abstract

The large negative impact of income on time spent online has been attributed to a negative own-price effect created by variation in the opportunity cost of time across internet users. Nonetheless, the coefficient on income could also be capturing a negative income effect: High-income users could reduce time spent online to consume, for example, leisure activities of higher quality. This paper estimates a demand function for time online using a time-use survey containing information on household income and individual labor earnings. In accordance with the negative income effect hypothesis, income still exerts a large negative impact after earnings are controlled for, whereas the response to earnings is negative only in certain ranges of the earnings distribution.

• Item Type: MPRA Paper
• Language: English
• Keywords: Internet usage; Shadow value of time; Spanish Time Use Survey; Type II Tobit model.
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply; L - Industrial Organization > L8 - Industry Studies: Services > L86 - Information and Internet Services ; Computer Software

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