Quality of communications infrastructure, local structural transformation, and inequality

Camilo Acosta and Luis Baldomero-Quintana

Journal of Economic Geography, 2024, vol. 24, issue 1, 117-144

Abstract: We estimate the causal impact of communication infrastructure quality on growth and structural transformation. We use variation across US counties’ Internet speeds in 2018 and build an instrument using ARPANET, a military network that preceded the modern Internet, with its location documented in historical government reports. We find that doubling Internet speeds increases the 4-year employment growth by 3.3–6.1 percentage points. Faster Internet shifts economic activity toward high-skilled services and away from non-tradeable services while increasing inequality. Industry linkages, capital-skill complementarity, and information and communication technology workers’ sorting rationalize our results. Medium and small cities and rural areas drive our results.

Keywords: communication costs; Internet; infrastructure; local structural transformation (search for similar items in EconPapers)
JEL-codes: F16 H54 L86 N92 R12 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Quality of Communications Infrastructure, Local Structural Transformation, and Inequality (2022)
Working Paper: Quality of Communications Infrastructure, Local Structural Transformation, and Inequality (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jecgeo:v:24:y:2024:i:1:p:117-144.

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