Which Plans to Reduce the Digital Divide? Policy Evaluation and Social Interaction

This paper analyzes the effect of implementing technological policies like computer donations or subsidization on the probability of an individual to have computer abilities, when this is affected by the computer skills of her household's other members, i.e. when there are significant within household peer effects. Our application for a sample of Italian households indicates that although the probability of being skilled is remarkably improved by the presence of a PC at home, thanks also to within household peer effects, the budget constraint of an household can be so binding to make the policy less effective for a large part of the target population.