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The Impact of Internet Subsidies in Public Schools

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  • Austan Goolsbee
  • Jonathan Guryan

Abstract

In an effort to alleviate the perceived growth of a digital divide, the U.S. government enacted a major subsidy for Internet and communications investment in schools starting in 1998. The program subsidized spending by 20-90 percent, depending on school characteristics. Using new data on school technology usage in every school in California from 1996 to 2000 as well as application data from the E-Rate program, this paper shows that the subsidy did succeed in significantly increasing Internet investment. The implied first-dollar price elasticity of demand for Internet investment is between -0.9 and -2.2 and the greatest sensitivity shows up among urban schools and schools with large black and Hispanic student populations. Rural and predominantly white and Asian schools show much less sensitivity. Overall, by the final year of the sample, there were about 66 percent more Internet classrooms than there would have been without the subsidy. Using a variety of test score results, however, it is clear that the success of the E-Rate program, at least so far, has been restricted to the increase in access. The increase in Internet connections has had no measurable impact on any measure of student achievement.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9090.

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Date of creation: Aug 2002
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Publication status: published as Goolsbee, Austan and Jonathan Guryan. "The Impact Of Internet Subsidies In Public Schools," Review of Economics and Statistics, 2006, v88(2,May), 336-347.
Handle: RePEc:nbr:nberwo:9090

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  1. Eriksson, Ross C & Kaserman, David L & Mayo, John W, 1998. "Targeted and Untargeted Subsidy Schemes: Evidence from Postdivestiture Efforts to Promote Universal Telephone Service," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 41(2), pages 477-502, October.
  2. Jerry Hausman, 1997. "Taxation by Telecommunications Regulation," NBER Working Papers 6260, National Bureau of Economic Research, Inc.
  3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  4. Joshua Angrist & Victor Lavy, 2002. "New Evidence on Classroom Computers and Pupil Learning," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(482), pages 735-765, October.
  5. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, Econometric Society, vol. 46(4), pages 931-59, July.
  6. Wolak, Frank A., 1996. "Can universal service survive in a competitive telecommunications environment? Evidence from the United States consumer expenditure survey," Information Economics and Policy, Elsevier, Elsevier, vol. 8(3), pages 163-203, September.
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