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Firm Responses to High-Speed Internet

Henrike Steimer
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Henrike Steimer: LMU Munich

No 258, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Does access to the broadband internet stimulate firm growth? In this paper, I analyze within-firm growth of established firms caused by the access to faster internet using geocoded social-security data. I identify firm responses to the access to the first generation of broadband internet and later speed upgrades by exploiting technological peculiarities of the broadband internet network. I find that firms with access to the first generation of broadband internet grow more slowly in employment while keeping their output growth constant. They reduce the share of low-skilled employment in their workforce. Further, I find that firms that receive access to later speed upgrades grow more in revenues and employment than firms that got access to the first generation of broadband internet but not to the upgrades. When getting access to higher internet speed, firms over-proportionally increase medium-skilled employment.

Keywords: ICT; internet; firm growth; skill-bias; technology (search for similar items in EconPapers)
JEL-codes: D22 J23 O33 (search for similar items in EconPapers)
Date: 2020-10-06
New Economics Papers: this item is included in nep-bec and nep-ict
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