Broadband Internet and Firm Entry: Evidence from Rural Iowa
The availability of broadband Internet service should have increased firm productivity and lowered firm entry costs. �However, validating the broadband effect is complicated by the rapid deployment of broadband Internet service across metropolitan areas, removing meaningful variation in broadband availability. �Deployment in rural markets was much more uneven, suggesting that the presence or absence of broadband service may have altered the site selection of firms targeting rural markets.� We investigate the effect of broadband availability on firm location decision in rural Iowa. �We establish a counterfactual baseline firm entry rate for each zip code area in rural counties by showing how the presence of broadband service in a ZIP code in 2001 affected firm entry in 1990-1992 before Broadband was available. �We then measure how the actual presence of broadband service in the same ZIP code affected firm entry in 2000-2002. �We show that the difference in estimated probability of entry between the counterfactual baseline and the actual response ten years later is the Difference-in-Differences estimate of the effect of broadband deployment on firm start-ups. �We find that broadband availability in a rural ZIP code has a positive and significant effect on firm entry in the ZIP code but only in rural markets adjacent to a metropolitan area or with a larger urban population.� Broadband access does not affect new firm entry in more remote rural markets
|Date of creation:||03 Dec 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.
- Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, number 9780199290444, March.
- Erik Brynjolfsson & Lorin M. Hitt, 2000. "Beyond Computation: Information Technology, Organizational Transformation and Business Performance," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 23-48, Fall.
- David H. Autor, 2001.
"Wiring the Labor Market,"
Journal of Economic Perspectives,
American Economic Association, vol. 15(1), pages 25-40, Winter.
- Röller, Lars-Hendrik & Waverman, Leonard, 2000.
"Telecommunications Infrastructure And Economic Development: A Simultaneous Approach,"
CEPR Discussion Papers
2399, C.E.P.R. Discussion Papers.
- Lars-Hendrik Roller & Leonard Waverman, 2001. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," American Economic Review, American Economic Association, vol. 91(4), pages 909-923, September.
- Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Dimelis, Sophia P. & Papaioannou, Sotiris K., 2011. "ICT growth effects at the industry level: A comparison between the US and the EU," Information Economics and Policy, Elsevier, vol. 23(1), pages 37-50, March.
- Kolko, Jed, 2012. "Broadband and local growth," Journal of Urban Economics, Elsevier, vol. 71(1), pages 100-113.
- John M. Quigley, 1998. "Urban Diversity and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 127-138, Spring.
- Holt, Lynne & Jamison, Mark, 0. "Broadband and contributions to economic growth: Lessons from the US experience," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 575-581, November.
- Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
- Chris Forman & Avi Goldfarb & Shane Greenstein, 2012. "The Internet and Local Wages: A Puzzle," American Economic Review, American Economic Association, vol. 102(1), pages 556-75, February.
- Daron Acemoglu, 2002.
"Technical Change, Inequality, and the Labor Market,"
Journal of Economic Literature,
American Economic Association, vol. 40(1), pages 7-72, March.
- Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
- Arthur Grimes & Cleo Ren & Philip Stevens, 2009.
"The Need for Speed: Impacts of Internet Connectivity on Firm Productivity,"
09_15, Motu Economic and Public Policy Research.
- Arthur Grimes & Cleo Ren & Philip Stevens, 2012. "The need for speed: impacts of internet connectivity on firm productivity," Journal of Productivity Analysis, Springer, vol. 37(2), pages 187-201, April.
- Bradford Mills & Gautam Hazarika, 2001. "The Migration of Young Adults from Non-Metropolitan Counties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 329-340.
- Kolko, Jed, 2010. "A new measure of US residential broadband availability," Telecommunications Policy, Elsevier, vol. 34(3), pages 132-143, April.
When requesting a correction, please mention this item's handle: RePEc:isu:genres:35696. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephanie Bridges)The email address of this maintainer does not seem to be valid anymore. Please ask Stephanie Bridges to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.