_Notes:_ MM denotes mobile money. Labor productivity is calculated using annual sales. Missing values are replaced by annual sales from two years ago. Control variables are omitted from the table. See Appendix Tables A.2 for full model results. Sampling weights applied. City fixed effects are not shown. Standard errors are clustered at the city level. *** p<0.01, ** p<0.05, * p<0.1.

The last set of robustness checks include elevation and night lights emission to the model specification. Elevation is measured in units of meters above the sea level and collected by the tablet during the enumeration stage of the survey. Nighttime lights emission is the amount of light captured by VIIRS sensors from satellite imagery over cloud-free skies within a one squarekilometer area in which the informal business is located.<sup>15</sup> While the former captures geographic connectivity,<sup>16</sup> the latter serves as a general proxy for access to infrastructure, such as electricity, which is a crucial constraint on firms’ ICT adoption in Zambia.<sup>17</sup> The results, as depicted in Table 5, remain robust to the inclusion of these controls, suggesting that the distance effect is not driven by geographic connectivity or access to infrastructure.

# **Table 5: Baseline Model with Additional Controls**

||(1)<br>PC|(2)<br>Tablet|(3)<br>Phone|(4)<br>MM|(5)<br>Website|
|---|---|---|---|---|---|
|Distance of Informal to Closest Formal Firm|-0.569*|-0.740***|-0.163***|-0.192***|-0.197|
||(0.336)|(0.125)|(0.018)|(0.063)|(0.437)|
|Elevation|0.006|-0.001|0.002|0.001|-0.003|
||(0.004)|(0.005)|(0.002)|(0.002)|(0.007)|
|Number of Observations|900|900|900|890|677|
|Distance of Informal to Closest Formal Firm|-0.242|-0.690***|-0.165***|-0.191**|-0.046|
||(0.566)|(0.205)|(0.026)|(0.075)|(0.588)|
|Nighttime Lights Emission|0.050*|0.009|0.003|0.002|0.022|
||(0.026)|(0.013)|(0.011)|(0.004)|(0.024)|
|Number of Observations|901|901|901|891|678|

_Notes:_ MM denotes mobile money. Elevation is captured by the tablet during the interview with the informal business in meters above sea level. Nighttime lights emissions are captured by VIIRS sensors from satellite imagery over cloud-free skies. A higher number indicates more light emission. Control variables are omitted from the table. See Appendix Table A.3 for full model results. Sampling weights applied. City fixed effects are not shown. Standard errors are clustered at the city level. *** p<0.01, ** p<0.05, * p<0.1.

Another endogeneity concern is related to the location choice of informal businesses. The results would be biased if informal businesses strategically decide to co-locate with formal firms to benefit

> 15 The nighttime lights emission ranges between 0 and 63, with higher numbers associated with more light emission. 16 To further ensure our distance measure is not simply capturing remoteness or other geographical features, we divide <mark>each city into quadrants</mark> and run additional robustness checks using quadrant fixed effects. <mark>The results are similar to the results in the baseline, see Appendix Table A.3.3 for results.</mark>

> 17 Around <mark>14 percent of informal businesses in Zambia report not being connected to the electricity grid and 77 percent report having had a least one power outage last month.</mark>

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