Internet Access and its Implications for Productivity, Inequality, and Resilience

32 Pages Posted: 30 Jul 2021 Last revised: 22 Sep 2021

See all articles by Jose Maria Barrero

Jose Maria Barrero

ITAM - Business School

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Steven J. Davis

University of Chicago; National Bureau of Economic Research (NBER); Hoover Institution

Date Written: September 18, 2021

Abstract

About one-fifth of paid workdays will be supplied from home in the post-pandemic economy, and more than one-fourth on an earnings-weighted basis. In view of this projection, we consider some implications of home internet access quality, exploiting data from the new Survey of Working Arrangements and Attitudes. Moving to high-quality, fully reliable home internet service for all Americans (“universal access”) would raise earnings-weighted labor productivity by an estimated 1.1% in the coming years. The implied output gains are $160 billion per year, or $4 trillion when capitalized at a 4% rate. Estimated flow output payoffs to universal access are nearly three times as large in economic disasters like the COVID-19 pandemic. Our survey data also say that subjective well-being was higher during the pandemic for people with better home internet service conditional on age, employment status, earnings, working arrangements, and other controls. In short, universal access would raise productivity, and it would promote greater economic and social resilience during future disasters that inhibit travel and in-person interactions.

Keywords: Internet access, productivity, COVID-19, working from home, remote work, earnings inequality, subjective well-being, economic resilience

JEL Classification: D13, D23, E24, J22, G18, M54, R3

Suggested Citation

Barrero, Jose Maria and Bloom, Nicholas and Davis, Steven J., Internet Access and its Implications for Productivity, Inequality, and Resilience (September 18, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-88, Available at SSRN: https://ssrn.com/abstract=3895137 or http://dx.doi.org/10.2139/ssrn.3895137

Jose Maria Barrero

ITAM - Business School ( email )

Rio Hondo No. 1
Col. Tizapan-San Angel Alc. Alvaro Obregon
Ciudad de Mexico, 01000
Mexico

Nicholas Bloom

Stanford University - Department of Economics ( email )

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HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

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Steven J. Davis (Contact Author)

University of Chicago ( email )

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National Bureau of Economic Research (NBER)

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Hoover Institution

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