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Quality of communications infrastructure, local structural transformation, and inequality

Author

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  • Camilo Acosta
  • Luis Baldomero-Quintana

Abstract

We estimate the causal impact of communication infrastructure quality on growth and structural transformation. We use variation across US counties’ Internet speeds in 2018 and build an instrument using ARPANET, a military network that preceded the modern Internet, with its location documented in historical government reports. We find that doubling Internet speeds increases the 4-year employment growth by 3.3–6.1 percentage points. Faster Internet shifts economic activity toward high-skilled services and away from non-tradeable services while increasing inequality. Industry linkages, capital-skill complementarity, and information and communication technology workers’ sorting rationalize our results. Medium and small cities and rural areas drive our results.

Suggested Citation

  • Camilo Acosta & Luis Baldomero-Quintana, 2024. "Quality of communications infrastructure, local structural transformation, and inequality," Journal of Economic Geography, Oxford University Press, vol. 24(1), pages 117-144.
    • Handle: RePEc:oup:jecgeo:v:24:y:2024:i:1:p:117-144.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbad032
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    More about this item

    Keywords

    communication costs; Internet; infrastructure; local structural transformation;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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