Impacts of USDA Broadband Loan and Grant Programs: Moving Toward Estimating a Rate of Return

Ivan Kandilov and Mitch Renkow

No 277661, Issue Reports from Farm Foundation

Abstract: In this paper, we take a step toward understanding the rate of return to government efforts to promote broadband. Specifically, we evaluate the impact of USDA’s broadband loan and grant programs on the average payroll per worker using zip code level data from the Zip Code Business Patterns for the period from 1997 to 2007. Because we employ data on the size of the loans and grants, we are able to produce a rough estimate of the rate of return on such investments. Our results indicate that a $1 increase in zip code per capita broadband loan results in about a $1.08 increase in payroll per worker. Results were nearly identical for the pilot broadband loans ($1.07 increase in payroll per worker for each additional loan dollar). We find no statistically significant impact of broadband grants received on the payroll per worker. Rough benefit-cost calculations suggest that total benefits from the current loan program substantially outweigh costs, with benefit-cost ratios ranging from 2.8 to 5.7 depending on assumptions about discount rates.

Keywords: Community/Rural/Urban Development; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 40
Date: 2018
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https://ageconsearch.umn.edu/record/277661/files/FP%20KandilovRenkow.pdf (application/pdf)
https://ageconsearch.umn.edu/record/277661/files/KandilovRenkowIR%20Summary.pdf (application/pdf)

Related works:
Journal Article: THE IMPACTS OF THE USDA BROADBAND LOAN AND GRANT PROGRAMS: MOVING TOWARD ESTIMATING A RATE OF RETURN (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ffispa:277661

DOI: 10.22004/ag.econ.277661

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