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Broadband Internet, Firm Performance, And Worker Welfare: Evidence And Mechanism

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  • Shiyi Chen
  • Wanlin Liu
  • Hong Song

Abstract

This paper examines the effect of high‐speed internet on firm's productivity and worker's wage in China. We exploit a national policy reform and devise a difference‐in‐difference strategy to address the endogeneity. We find that high‐speed internet significantly increases firm's productivity and worker's wage, and the estimate is larger for firms in industries with high skill intensity and for more educated workers. We provide suggestive evidence that the mechanism is likely from firm's increased use of skill‐biased technology and the flattened management organization. (JEL O2, O3, J3)

Suggested Citation

  • Shiyi Chen & Wanlin Liu & Hong Song, 2020. "Broadband Internet, Firm Performance, And Worker Welfare: Evidence And Mechanism," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1146-1166, July.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:3:p:1146-1166
    DOI: 10.1111/ecin.12854
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    1. Qing Wang & Wenjing Xu & Yanghua Huang & Jidong Yang, 2022. "The Effect of Fast Internet on Employment: Evidence from a Large Broadband Expansion Program in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(3), pages 100-134, May.
    2. Nguyen, Trung Thanh & Do, Manh Hung & Rahut, Dil & Nguyen, Viet Hung & Chhay, Panharoth, 2023. "The impact of internet use on the performance of agricultural cooperatives in Vietnam," MPRA Paper 117274, University Library of Munich, Germany.
    3. Juan Jung & Gonzalo Gómez-Bengoechea, 2022. "A literature review on firm digitalization: drivers and impacts," Studies on the Spanish Economy eee2022-20, FEDEA.
    4. Jin, Xin & Ma, Baojie & Zhang, Haifeng, 2023. "Impact of fast internet access on employment: Evidence from a broadband expansion in China," China Economic Review, Elsevier, vol. 81(C).
    5. Trung Thanh Nguyen & Manh Hung Do & Dil B. Rahut & Viet Hung Nguyen & Panharoth Chhay, 2023. "Female leadership, internet use, and performance of agricultural cooperatives in Vietnam," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(3), pages 877-903, September.
    6. Stefano Magrini & Alessandro Spiganti, 2024. "A tale of two cities: Communication, innovation, and divergence," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 390-413, January.
    7. Wang, Chang & Guo, Yue & Yang, Yu & Chen, Shiyi, 2022. "The environmental benefits of electricity industry restructuring in China: Ownership mixing vs. vertical unbundling," Energy Economics, Elsevier, vol. 115(C).
    8. Stefano Magrini & Alessandro Spiganti, 2021. "The Day After Covid-19: Implications for Growth, Specialization, and Inequality," Working Papers 2021:13, Department of Economics, University of Venice "Ca' Foscari".
    9. Zhang, Shiying & Wang, Qing & Xiao, Yao & Zhang, Yilin, 2023. "Internet exposure during adolescence and age at first marriage," Journal of Asian Economics, Elsevier, vol. 84(C).
    10. Trung Thanh Nguyen & Manh Hung Do, 2022. "Female rural–urban migrants and online marketplaces in emerging economies: Evidence from Thailand and Vietnam," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 9(3), pages 317-342, September.
    11. Tian, Binbin & Yu, Baixue & Chen, Shi & Ye, Jingjing, 2020. "Tax incentive, R&D investment and firm innovation: Evidence from China," Journal of Asian Economics, Elsevier, vol. 71(C).
    12. Sun, Nan & Kong, Dongmin & Tao, Yunqing, 2023. "Does broadband infrastructure affect corporate mergers and acquisitions? Quasi-natural experimental evidence from China," International Review of Financial Analysis, Elsevier, vol. 85(C).
    13. Shiyi Chen & Wanlin Liu & Hong Song & Qing Zhang, 2024. "Government‐led e‐commerce expansion project and rural household income: Evidence and mechanisms," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 150-174, January.
    14. Yang Liu & Yaojun Fan & Yifan Wang & Jiayu Huang & Hu Xun, 2024. "City innovation ability and internet infrastructure development: Evidence from the “Broadband China” policy," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 121-146, January.
    15. Chen, Lipeng & Liu, Wanlin, 2022. "The effect of Internet access on body weight: Evidence from China," Journal of Health Economics, Elsevier, vol. 85(C).
    16. Karim, Mohammed Shamsul & Nahar, Sharmin & Demirbag, Mehmet, 2022. "Resource-Based Perspective on ICT Use and Firm Performance: A Meta-analysis Investigating the Moderating Role of Cross-Country ICT Development Status," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    17. Nawab Khan & Ram L. Ray & Hazem S. Kassem & Farhat Ullah Khan & Muhammad Ihtisham & Shemei Zhang, 2022. "Does the Adoption of Mobile Internet Technology Promote Wheat Productivity? Evidence from Rural Farmers," Sustainability, MDPI, vol. 14(13), pages 1-15, June.
    18. Zhang, Liangliang & Tao, Yunqing & Nie, Cong, 2022. "Does broadband infrastructure boost firm productivity? Evidence from a quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 48(C).
    19. Trung Thanh Nguyen & Manh Hung Do, 2022. "Female migrants and online market participation in rural Southeast Asia," TVSEP Working Papers wp-026, Leibniz Universitaet Hannover, Institute of Development and Agricultural Economics, Project TVSEP.

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    JEL classification:

    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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