Broadband and Local Growth

49 Pages Posted: 22 Sep 2010

See all articles by Jed Kolko

Jed Kolko

Public Policy Institute of California

Date Written: August 21, 2010

Abstract

I find a positive relationship between broadband expansion and local economic growth. This relationship is stronger in industries that rely more on information technology and in areas with lower population densities. Instrumenting for broadband expansion with slope of terrain leans in the direction of a causal relationship, though not definitively.

The economic benefits of broadband expansion for local residents appear to be limited. Broadband expansion is associated with population growth as well as employment growth, and both the average wage and the employment rate – the share of working-age adults that is employed – are unaffected by broadband expansion. Furthermore, expanding broadband availability does not change the prevalence of telecommuting or other home-based work. Like other place-based policies, expanding broadband availability could raise property values and the local tax base, but without more direct benefits for residents in the form of higher wages or improved access to jobs.

The analysis relies on the uneven diffusion of broadband throughout the United States, allowing comparisons between areas with greater and less growth in broadband availability. I combine broadband data from the Federal Communications Commission, employment data from the National Establishment Time-Series database, and other economic data from the U.S. Census and BLS to examine broadband availability and economic activity in the U.S. between 1999 and 2006.

Keywords: broadband, Internet, economic development, place-based

JEL Classification: R11, O33, L96

Suggested Citation

Kolko, Jed, Broadband and Local Growth (August 21, 2010). Available at SSRN: https://ssrn.com/abstract=1680597 or http://dx.doi.org/10.2139/ssrn.1680597

Jed Kolko (Contact Author)

Public Policy Institute of California ( email )

500 Washington Street
Suite 800
San Francisco, CA 94111
United States

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