Does broadband affect local economic outcomes less than we thought? Micro evidence from Louisiana

Abstract

High-speed internet access is a core tenet of economic development strategies post-COVID. While expanding access is linked to many positive benefits, evidence associating broadband to job growth and business formation is more mixed. This study expands the literature along several dimensions, most notably exploring how business download speeds affect employment, business formation, and survival at a microscale. Using conventional and Least Absolute Shrinkage and Selection Operator instrumental variables strategies, with terrain features as instruments, we find consistent evidence that broadband speeds stimulate local development. However, our estimates are 60%–65% smaller than those from recent studies, suggesting that broadband may be less beneficial than previously assumed.