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Does state aid for broadband deployment in rural areas close the digital and economic divide?

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  • Briglauer, Wolfgang
  • Dürr, Niklas S.
  • Falck, Oliver
  • Hüschelrath, Kai

Abstract

We evaluate the impact of a major European state aid program for broadband deployment applied to rural areas in the German State of Bavaria in the years 2010 and 2011. Using difference-in-differences estimation strategies, we find that aided municipalities have - depending on broadband quality - a between 16.8 and 23.2 percent higher broadband coverage than non-aided municipalities. This increase in broadband coverage - closing the digital divide - results in an increase of on average seven employed individuals living in the respective aid-receiving municipalities while leaving the number of employed or selfemployed individuals or wages unaffected. We therefore conclude that an increase in broadband coverage through state aid prevents rural areas from depopulation, but does not contribute to a further closing of the economic divide in the form of creating new jobs.

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  • Briglauer, Wolfgang & Dürr, Niklas S. & Falck, Oliver & Hüschelrath, Kai, 2016. "Does state aid for broadband deployment in rural areas close the digital and economic divide?," ZEW Discussion Papers 16-064, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:16064
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    Cited by:

    1. Briglauer, Wolfgang & Dürr, Niklas S. & Gugler, Klaus, 2019. "A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties," ZEW Discussion Papers 19-026, ZEW - Leibniz Centre for European Economic Research.
    2. Bourreau, Marc & Feasey, Richard & Nicolle, Ambre, 2020. "Assessing fifteen years of State Aid for broadband in the European Union: A quantitative analysis," Telecommunications Policy, Elsevier, vol. 44(7).
    3. Tomaso Duso & Mattia Nardotto & Jo Seldeslachts, 2021. "A Retrospective Study of State Aid Control in the German Broadband Market," Discussion Papers of DIW Berlin 1931, DIW Berlin, German Institute for Economic Research.
    4. Thonipara, Anita & Sternberg, Rolf G. & Proeger, Till & Haefner, Lukas, 2020. "Assessing the Digital Divide and its Regional Determinants: Evidence from a Web-Scraping Analysis," ifh Working Papers 25/2020, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    5. Budzinski, Oliver & Gänßle, Sophia & Lindstädt-Dreusicke, Nadine, 2020. "The battle of YouTube, TV and Netflix: An empirical analysis of competition in audio-visual media markets," Ilmenau Economics Discussion Papers 137, Ilmenau University of Technology, Institute of Economics.
    6. Matteucci, Nicola, 2021. "Procuring NGA infrastructure: The performance of EMAT auctions in Italy," Telecommunications Policy, Elsevier, vol. 45(1).
    7. Navío-Marco, Julio & Pérez-Leal, Raquel & Ruiz-Gómez, Luis Manuel, 2019. "Analysis of the WiFi4EU initiative as a potential instrument to correct digital divide in rural areas in the EU," 30th European Regional ITS Conference, Helsinki 2019 205200, International Telecommunications Society (ITS).
    8. Briglauer, Wolfgang & Dürr, Niklas & Gugler, Klaus, 2019. "A Retrospective Study on the Regional Benefits and Spillover Effects of High-Speed Broadband Networks: Evidence from German Counties," 30th European Regional ITS Conference, Helsinki 2019 205171, International Telecommunications Society (ITS).
    9. 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].
    10. Fourberg, Niklas & Korff, Alex, 2020. "Fiber vs. vectoring: Limiting technology choices in broadband expansion," Telecommunications Policy, Elsevier, vol. 44(8).
    11. 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).
    12. 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

    government policy; state aid; ex-post evaluation; broadband; employment; rural areas; European Union; Germany; Bavaria;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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