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

Wolfgang Briglauer, Niklas S. Dürr, Oliver Falck and Kai Hüschelrath
Authors registered in the RePEc Author Service: Kai Hueschelrath and Niklas Stephan Duerr

Information Economics and Policy, 2019, vol. 46, issue C, 68-85

Abstract: We evaluate the impact of a major European state aid programme for speed upgrades in broadband internet availability applied to rural areas in the German state of Bavaria throughout 2010 and 2011. We use a matched difference-in-differences estimation strategy that compares treated and untreated municipalities that are balanced with respect to funding criteria. We find that aided municipalities have a significantly higher broadband coverage at higher speed than non-aided municipalities. This increase in broadband coverage does not, on average, benefit the local population in terms of increase in local jobs per resident or wages. However, these effects are heterogeneous across skill groups. Furthermore, we find positive effects on the employment rate among residents. Taking these results together suggests that an increase in broadband coverage through state aid protects rural areas from depopulation (while residents work at other locations), but does not contribute to a further closing of the economic divide in the form of creating new jobs.

Keywords: Government policy; State aid; Ex-post evaluation; Broadband; Employment; Rural areas; European union; Germany; Bavaria (search for similar items in EconPapers)
JEL-codes: D62 D73 G38 H23 J23 K23 L52 L96 L98 R23 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Working Paper: Does state aid for broadband deployment in rural areas close the digital and economic divide? (2019)
Working Paper: Does State Aid for Broadband Deployment in Rural Areas Close the Digital and Economic Divide? (2018)
Working Paper: DOES STATE AID FOR BROADBAND DEPLOYMENT IN RURAL AREAS CLOSE THE DIGITAL AND ECONOMIC DIVIDE? (2017)
Working Paper: Does state aid for broadband deployment in rural areas close the digital and economic divide? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:46:y:2019:i:c:p:68-85

DOI: 10.1016/j.infoecopol.2019.01.001

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