The Effects of Broadband Deployment in Rural Areas: Evaluating the Connect America Fund Program

Abstract

This paper estimates the effect of broadband deployment in unserved rural areas in the United States through Connect America Fund (CAF) Phase-II. CAF is a large-scale program sponsored by the Federal Government that subsidizes companies to provide service to unserved or underserved areas, of which Phase-II is its largest component. We take advantage of the lagged implementation of Phase-II as a natural experiment and rely on difference-in-differences estimations to evaluate the impacts of broadband availability on employment rates of rural areas. Preliminary results suggest an overall positive effect on employment rates, however, varying substantially by region.

Keywords: Broadband Infrastructure, Employment, Digital Divide, Economic Development, Rural Areas