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Broadband upgrade and firm performance in rural areas: Quasi-experimental evidence

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  • Canzian, Giulia
  • Poy, Samuele
  • Schüller, Simone

Abstract

This paper analyzes the impact of advanced (up to 20 Mbps download, up to 1 Mbps upload) broadband accessibility on firm performance by exploiting a unique local policy of a staggered broadband infrastructure upgrade across rural municipalities. In a difference-in-differences framework based on longitudinal balance sheet data for limited companies, we show that ADSL2+ availability is associated with increases in firms’ revenue and total factor productivity (by on average 14.8 and 9.1 percent cumulatively over two years), but not with significant changes in personnel cost or employment. Additional analysis of aggregate administrative data shows no significant impact on the total number of active firms or local employment. Pre-trend evaluations support a causal interpretation.

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  • Canzian, Giulia & Poy, Samuele & Schüller, Simone, 2019. "Broadband upgrade and firm performance in rural areas: Quasi-experimental evidence," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 87-103.
    • Handle: RePEc:eee:regeco:v:77:y:2019:i:c:p:87-103
    DOI: 10.1016/j.regsciurbeco.2019.03.002
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    Cited by:

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    3. Chloé Duvivier & Emma Cazou & Stéphanie Truchet‐Aznar & Cédric Brunelle & Jean Dubé, 2021. "When, where, and for what industries does broadband foster establishment births?," Papers in Regional Science, Wiley Blackwell, vol. 100(6), pages 1377-1401, December.
    4. Juan Jung & Gonzalo Gómez-Bengoechea, 2022. "A literature review on firm digitalization: drivers and impacts," Studies on the Spanish Economy eee2022-20, FEDEA.
    5. Leogrande, Angelo & Magaletti, Nicola & Cosoli, Gabriele & Massaro, Alessandro, 2022. "Fixed Broadband Take-Up in Europe," MPRA Paper 112246, University Library of Munich, Germany.
    6. Shunbin Zhong & Mengding Li & Yihui Liu & Yun Bai, 2023. "Do Internet Development and Urbanization Foster Regional Economic Growth: Evidence from China’s Yangtze River Economic Belt," Sustainability, MDPI, vol. 15(12), pages 1-14, June.
    7. Falk, Martin & Hagsten, Eva, 2021. "Impact of high-speed broadband access on local establishment dynamics," Telecommunications Policy, Elsevier, vol. 45(4).
    8. Cambini, Carlo & Grinza, Elena & Sabatino, Lorien, 2023. "Ultra-fast broadband access and productivity: Evidence from Italian firms," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    9. Fabling, Richard & Grimes, Arthur, 2021. "Picking up speed: Does ultrafast broadband increase firm productivity?," Information Economics and Policy, Elsevier, vol. 57(C).
    10. Shunbin Zhong & Huafu Shen & Ziheng Niu & Yang Yu & Lin Pan & Yaojun Fan & Atif Jahanger, 2022. "Moving towards Environmental Sustainability: Can Digital Economy Reduce Environmental Degradation in China?," IJERPH, MDPI, vol. 19(23), pages 1-23, November.
    11. Wolfgang Briglauer & Michał Grajek, 2021. "Effectiveness and efficiency of state aid for new broadband networks: Evidence from OECD member states," ESMT Research Working Papers ESMT-21-01, ESMT European School of Management and Technology.
    12. Lynda Sanderson & Garrick Wright-McNaughton & Naomitsu Yashiro, 2022. "Does high-speed internet boost exporting?," Working Papers 2022/02, New Zealand Productivity Commission.
    13. Briglauer, Wolfgang & Dürr, Niklas & Gugler, Klaus, 2021. "A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties," International Journal of Industrial Organization, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Broadband Internet; Firm performance; Quasi-natural experiment; Regional economic development; Infrastructure policy;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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