Is Faster Better? Quantifying the Relationship Between Broadband Speed and Economic Growth

In this bulletin, I aim to quantify the relationship between higher broadband speeds (10 Mbps versus 25 Mbps) and the growth rates in important economic outcomes in U.S. counties including jobs, personal income, and labor earnings. Doing so exposes the potential for severe selection bias in studies of broadband’s economic impact, which is addressed in this study using Coarsened Exact Matching. Once balanced, the data reveal no economic payoff from the 15 Mbps speed difference between the years 2013 and 2015. I also revisit the Crandall, Lehr and Litan (2007) study on broadband’s effect on employment to evaluate the possible impacts of selection bias, and conclude that the positive benefits of broadband reported in that particular study are likely spurious. The selection bias problem may infect other studies on the economic impacts of broadband Internet services.

Do counties with mostly 25 Mbps broadband connections fare better economically than counties with mostly 10 Mbps broadband connections? I find no evidence of such an effect here, at least with respect to the growth in jobs, personal income, or labor earnings between 2013 and 2015.