Abstract
We analyze whether cybersecurity, as an associated cost attached to digitization, slows down the digital economy. Our identification strategy exploits the staggered adoption of security breach notification laws (SBNLs) in 47 US states, which require companies to publicly disclose data breaches. We study the impact of SBNLs toward the employment by IT service providers, the main suppliers of the digital economy. We find that the enactment of SBNLs leads to reduction in employment by mature and large IT service providers, but not for younger and smaller firms. The results hold under various robustness and falsification tests. This study provides fresh evidence related to the unintended and broader impacts of cybersecurity legislation.
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