Working Paper: NBER ID: w20826
Authors: Anders Akerman; Ingvil Gaarder; Magne Mogstad
Abstract: Does adoption of broadband internet in firms enhance labor productivity and increase wages? And is this technological change skill biased or factor neutral? We exploit rich Norwegian data to answer these questions. A public program with limited funding rolled out broadband access points, and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Our results suggest that broadband internet improves (worsens) the labor outcomes and productivity of skilled (unskilled) workers. We explore several possible explanations for the skill complementarity of broadband internet. We find suggestive evidence that broadband adoption in firms complements skilled workers in executing nonroutine abstract tasks, and substitutes for unskilled workers in performing routine tasks. Taken together, our findings have important implications for the ongoing policy debate over government investment in broadband infrastructure to encourage productivity and wage growth.
Keywords: Broadband Internet; Labor Productivity; Wages; Skill Complementarity
JEL Codes: J23; J24; J31; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased availability of broadband internet (L96) | Improved labor outcomes of skilled individuals (J24) |
| Increased availability of broadband internet (L96) | Decrease in wages of low-skilled individuals (F66) |
| Increased availability of broadband internet (L96) | Decrease in output elasticity of unskilled labor (F66) |
| Broadband adoption in firms (L96) | Skill-biased technological change (J24) |
| Broadband adoption in firms (L96) | Increase in marginal productivity of skilled labor (J24) |
| Broadband adoption in firms (L96) | Decrease in marginal productivity of unskilled labor (F66) |