The impact of ultra-fast broadband on labor income: an event study approach

Abstract

ABSTRACT We investigate the impact of ultra-fast broadband connections on labor income and employment. We use panel data for Italian municipalities for the period 2012–2019 and we exploit the staggered roll-out of ultra-fast broadband started in 2015. Through an event study approach, we find evidence of endogeneity between ultra-fast broadband roll-out and labor market outcomes. To identify causal relationships, we use income from pensions to implement the estimator developed by [Freyaldenhoven, S., C. Hansen, and J. M. Shapiro. 2019. “Pre-Event Trends in the Panel Event-Study Design.” American Economic Review 109 (9): 3307–3338. https://doi.org/10.1257/aer.20180609.]. We find that access to ultra-fast broadband increases the income of the self-employed by 1.3% but has no impact on workers. Such an effect is mostly driven by a rise in self-employed workers, which is concentrated in urban areas, and in municipalities at the top and bottom quartiles of labor income.