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The Skill Complementarity of Broadband Internet

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  • Anders Akerman
  • Ingvil Gaarder
  • Magne Mogstad

Abstract

Does adoption of broadband internet in firms enhance labor productivity and increase wages? Is this technological change skill biased or factor neutral? We combine several Norwegian data sets to answer these questions. A public program with limited funding rolled out broadband access points and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Our results suggest that broadband internet improves (worsens) the labor market outcomes and productivity of skilled (unskilled) workers. We explore several possible explanations for the skill complementarity of broadband internet. We find suggestive evidence that broadband adoption in firms complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth. JEL Codes: J23, J24, J31, O33.

Suggested Citation

  • Anders Akerman & Ingvil Gaarder & Magne Mogstad, 2015. "The Skill Complementarity of Broadband Internet," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 1781-1824.
    • Handle: RePEc:oup:qjecon:v:130:y:2015:i:4:p:1781-1824
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    File URL: http://hdl.handle.net/10.1093/qje/qjv028
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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