The effects of broadband internet expansion on labor market outcomes

ternet access from 1999 to 2007 on labor market outcomes through-out the United States. Recent federal policy programs have allocated $18 billion toward subsidizing the spread of this technology, espe-cially to rural areas. Understanding the interplay between technol-ogy, firms, and the labor market is important for evaluating whether additional scarce government resources should be allocated to im-prove this type of infrastructure. Using models that include county and time fixed effects, the author finds that gaining access to broad-band services in a county is associated with approximately a 1.8 per-centage point increase in the employment rate, with larger effects in rural and isolated areas. Most of the employment gains result from existing firms increasing the scale of their labor demand and from growth in the labor force. These results are consistent with a theoretical model in which broadband technology is complemen-tary to skilled workers, with larger effects among college-educated workers and in industries and occupations that employ more col-lege-educated workers. Broadband is an advanced telecommunication technology that allows data to be transmitted at increasingly faster speeds and is crucial for the Internet to realize its true potential in terms of equal access and benefits to users. This technology is primarily deployed by private-sector firms, and dif-fusion proceeds from places where the technology is most profitable, such as urban areas, to other areas. The digital divide between areas that have broadband and those that do not is a serious policy concern because of the common belief that lack of access to a high-speed Internet connection has adverse economic and social costs in unserved areas. This article uses the major expansion in broadband access between 1999 and 2007, when cover-age went from 60 % of the population to 96%, to evaluate the effect of broadband deployment on labor market outcomes