Broadband Diffusion and Firm Performance in Rural Areas: Quasi-Experimental Evidence

Giulia Canzian (), Samuele Poy () and Simone Schüller
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Giulia Canzian: IRVAPP

No 9429, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This article analyzes the causal impact of advanced broadband accessibility on firm performance. We exploit a unique local policy intervention of a staged broadband infrastructure installation across rural municipalities in the Province of Trento (Italy), generating a source of exogenous (spatial and temporal) variation in the provision of next-generation broadband technology (ADSL2+). Employing a difference-in-differences strategy and using longitudinal firm-level data on annual balance sheet information of corporate enterprises, we show that ADSL2+ availability is associated with a significant increase in annual sales turnover of about 40 percent and an increase in value added of roughly 25 percent over the period of two years. The positive effect is found to be rather stable for different lengths of treatment exposure and across industrial sectors. However, no significant effects are found with respect to number of employees. Placebo estimations support a causal interpretation of our results. Overall, established corporate enterprises in 'underserved' rural and remote areas appear to profit considerably from enhanced broadband delivery programs in terms of economic performance.

Keywords: regional development; quasi experiment; firm performance; broadband internet (search for similar items in EconPapers)
JEL-codes: J24 L24 L26 O33 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2015-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published - revised version published in: Regional Science and Urban Economics, 2019, 77, 87–103.

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Working Paper: Broadband Diffusion and Firm Performance in Rural Areas: Quasi-Experimental Evidence (2015)
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