100 Mbps broadband means 0.2% to 0.3% lower unemployment, biggest impact in rural communities, study says

by Steve Blum • , , , ,

We can do it

Faster and better broadband service means more jobs and lower unemployment. Rural communities benefit more from gaining access to high quality broadband service than urban and suburban areas. That’s the conclusion of a study by three researchers, Bento Lobo and Rafayet Alam at the University of Tennessee at Chattanooga’s finance and economics department, and Brian Whitacre – at Oklahoma State University’s agricultural economics department.

They compared high speed broadband availability – defined as 100 Mbps download speed or better – to unemployment statistics in Tennessee between 2011 and 2015. They also factored out a potential source of bias: the tendency of Internet service providers to upgrade infrastructure and service in richer communities while redlining poorer ones.

Their results are dramatic…

High broadband speed matters and results in approximately 0.26 percentage points lower unemployment in counties with high speed compared to counties with low speed broadband…Additionally, early adoption of high speed broadband could reduce unemployment rates by an average of 0.16 percentage points per year. The results also show that compared to urban areas, the benefits of better quality broadband are disproportionately greater in rural areas.

From a policy standpoint, our research shows that investments in faster broadband can have significant employment effects, especially in rural areas…While it may make little difference to move from 10 Mbps to 25 Mbps, it could (and our results suggest that it does) make a significant difference to move to 100 Mbps or higher speeds…Our results consistently show that access to faster speed results in a decrease of 0.2 – 0.3 percentage points in unemployment, which can be in the 100s of jobs for some counties.

It’s a landmark study, and deserves to be read in its entirely, not least for the thorough review of past research into the economic benefits of better broadband service. The results also track with research conducted last year by the Monterey Bay Economic Partnership and the Central Coast Broadband Consortium, which found that broadband service at 100 Mbps download and 20 Mbps upload speeds is the minimum necessary for full participation in today’s digital economy.

Lobo, B., Alam, R., Whitacre, B. (2019). Broadband Speed and Unemployment Rates: Data and Measurement Issues, Telecommunications Policy, April 2019