The Rewards of Municipal Broadband: An Econometric Analysis of the Labor Market

Abstract

Worried about being left behind in the Digital Age, a few hundred municipalities have chosen to construct and operate high-speed Internet networks. Above all else, it is the impacts on the labor market—i.e., the promise of “more jobs”—that form the policy justification for these municipal investments, though evidence of such effects is informal and anecdotal. In this article, we offer (to our knowledge) the first statistical evidence on the effects on labor market outcomes of municipal broadband systems. Using data obtained from the U.S. Census Bureau’s American Community Survey, we apply the Difference-in-Differences estimator, augmented with Coarsened Exact Matching and the wild bootstrap, to quantify the economic impact, if any, of the county-wide government-owned network (“GON”) in Chattanooga Tennessee on labor market outcomes. Across a variety of empirical models, we find no payoffs in the labor market from the city’s broadband investments. An automotive plant built in the area is, however, found to substantially increase automobile manufacturing employment. Since Chattanooga’s system is an overbuild of multiple private providers, we stress that our findings may not be generalized to areas where broadband services are not available absent the municipal system. Also, our results cannot speak to the benefits of high-speed Internet services generally, since broadband Internet service was and remains available in Chattanooga absent the municipal system.