Broadband Infrastructure and Income Inequality

36 Pages Posted: 5 May 2017 Last revised: 9 Jul 2019

See all articles by Georges Vivien Houngbonon

Georges Vivien Houngbonon

World Bank; International Finance Corporation

Julienne Liang

France Telecom

Date Written: July 16, 2018

Abstract

A burgeoning literature has emphasized the effects of ICT on job polarization, but there is still a lack of evidence about its impact on income distribution. In this paper, we augment income distribution and labor market data with detailed broadband data from France to investigate the impact of broadband infrastructure on income inequality. Using a two-stage instrumental variable estimator with a logistic diffusion model at the first-stage, we find that income inequality falls with the diffusion of broadband infrastructure. More precisely, we find that a 10-percentage-point increase in broadband penetration lowers the Gini coefficient by 0.34 percentage point. Further empirical analyses suggest that this effect stems from a growth of low-skill service jobs. It is greater in less densely populated areas, and become significant as the penetration rate of broadband infrastructure rises above 28%.

Keywords: Broadband Internet, Income Inequality, Telecommunications

JEL Classification: D31, L96, O15

Suggested Citation

Houngbonon, Georges Vivien and Liang, Julienne, Broadband Infrastructure and Income Inequality (July 16, 2018). Available at SSRN: https://ssrn.com/abstract=2963860 or http://dx.doi.org/10.2139/ssrn.2963860

Georges Vivien Houngbonon

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

International Finance Corporation ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

Julienne Liang (Contact Author)

France Telecom ( email )

France

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