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The (Fuzzy) Digital Divide: The Effect of Broadband Internet Use on UK Firm Performance

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  • Timothy De Stefano
  • Richard Kneller
  • Jonathan Timmis

Abstract

This paper applies a fuzzy regression discontinuity design to study the effects of ADSL broadband internet on the performance of firms. We exploit a geographical discontinuity in the availability of ADSL broadband, firms located one side of the divide had access to broadband services that those on the other side did not. The discontinuity stems from an historical accident, whereby the telecommunications in one area of the North East of England is delivered by a separate company to the national monopoly provider. We study the discontinuity at the boundary between these two telecommunications providers, which rolled out broadband infrastructure at different times. Our analysis strongly suggests that broadband use has no statistically significant effect on the performance of firms.

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  • Timothy De Stefano & Richard Kneller & Jonathan Timmis, 2014. "The (Fuzzy) Digital Divide: The Effect of Broadband Internet Use on UK Firm Performance," Discussion Papers 14/06, University of Nottingham, School of Economics.
    • Handle: RePEc:not:notecp:14/06
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    Cited by:

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    2. Rita K. Almeida & Ana M. Fernandes & Mariana Viollaz, 2017. "Does the Adoption of Complex Software Impact Employment Composition and the Skill Content of Occupations? Evidence from Chilean Firms," CEDLAS, Working Papers 0214, CEDLAS, Universidad Nacional de La Plata.
    3. Biagi, Federico & Falk, Martin, 2017. "The impact of ICT and e-commerce on employment in Europe," Journal of Policy Modeling, Elsevier, vol. 39(1), pages 1-18.
    4. Jonas Hjort & Jonas Poulsen, 2019. "The Arrival of Fast Internet and Employment in Africa," American Economic Review, American Economic Association, vol. 109(3), pages 1032-1079, March.
    5. Canzian, Giulia & Poy, Samuele & Schüller, Simone, 2015. "Broadband Diffusion and Firm Performance in Rural Areas: Quasi-Experimental Evidence," IZA Discussion Papers 9429, Institute of Labor Economics (IZA).
    6. Matjokana, Hlanganani Rabia & David, Oladipo Olalekan, 2024. "The effects of the fourth industrial revolution on employment in South Africa: Variance decomposition analysis," Technology in Society, Elsevier, vol. 77(C).
    7. Bertschek, Irene & Niebel, Thomas, 2016. "Mobile and more productive? Firm-level evidence on the productivity effects of mobile internet use," Telecommunications Policy, Elsevier, vol. 40(9), pages 888-898.
    8. Bastian Stockinger, 2019. "Broadband internet availability and establishments’ employment growth in Germany: evidence from instrumental variables estimations," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 53(1), pages 1-23, December.
    9. Fabling, Richard & Grimes, Arthur, 2021. "Picking up speed: Does ultrafast broadband increase firm productivity?," Information Economics and Policy, Elsevier, vol. 57(C).
    10. DeStefano, Timothy & Kneller, Richard & Timmis, Jonathan, 2018. "Broadband infrastructure, ICT use and firm performance: Evidence for UK firms," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 110-139.
    11. Dimitris Gavalas & Theodoros Syriopoulos & Efthimios Roumpis, 2022. "Digital adoption and efficiency in the maritime industry," Journal of Shipping and Trade, Springer, vol. 7(1), pages 1-22, December.
    12. Briglauer, Wolfgang & Dürr, Niklas S. & Falck, Oliver & Hüschelrath, Kai, 2019. "Does state aid for broadband deployment in rural areas close the digital and economic divide?," Information Economics and Policy, Elsevier, vol. 46(C), pages 68-85.
    13. Bertschek, Irene & Briglauer, Wolfgang & Hüschelrath, Kai & Krämer, Jan & Frübing, Stefan & Kesler, Reinhold & Saam, Marianne, 2016. "Metastudie zum Fachdialog Ordnungsrahmen für die Digitale Wirtschaft: Im Auftrag des Bundesministeriums für Wirtschaft und Energie (BMWi)," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 147040.
    14. Viete, Steffen & Erdsiek, Daniel, 2015. "Mobile information and communication technologies, flexible work organization and labor productivity: Firm-level evidence," ZEW Discussion Papers 15-087, ZEW - Leibniz Centre for European Economic Research.
    15. 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.
    16. Briglauer, Wolfgang & Dürr, Niklas S. & Falck, Oliver & Hüschelrath, Kai, 2019. "Does state aid for broadband deployment in rural areas close the digital and economic divide?," Information Economics and Policy, Elsevier, vol. 46(C), pages 68-85.
    17. Stockinger, Bastian, 2017. "The effect of broadband internet on establishments' employment growth: evidence from Germany," IAB-Discussion Paper 201719, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    18. Falk, Martin & Hagsten, Eva, 2021. "Impact of high-speed broadband access on local establishment dynamics," Telecommunications Policy, Elsevier, vol. 45(4).
    19. Mariana Viollaz, 2017. "ICT Adoption in Micro and Small Firms: Can Internet Access Improve Labor Productivity?," CESifo Working Paper Series 6839, CESifo.
    20. Bertschek Irene & Briglauer Wolfgang & Hüschelrath Kai & Kauf Benedikt & Niebel Thomas, 2015. "The Economic Impacts of Broadband Internet: A Survey," Review of Network Economics, De Gruyter, vol. 14(4), pages 201-227, December.
    21. Paul Gaggl & Greg C. Wright, 2017. "A Short-Run View of What Computers Do: Evidence from a UK Tax Incentive," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 262-294, July.
    22. Haskel, Jonathan & Edquist, Harald & Goodridge, Peter, 2019. "Productivity, Network Effects and Telecommunications Capital: Evidence from the US and Europe," CEPR Discussion Papers 13910, C.E.P.R. Discussion Papers.
    23. Abrardi, Laura & Cambini, Carlo, 2019. "Ultra-fast broadband investment and adoption: A survey," Telecommunications Policy, Elsevier, vol. 43(3), pages 183-198.

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    More about this item

    Keywords

    broadband; firms; fuzzy regression discontinuity JEL Numbers: J23; J24; J31;
    All these keywords.

    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

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