Broadband Diffusion and Firm Performance in Rural Areas: Quasi-Experimental Evidence

41 Pages Posted: 19 Oct 2015 Last revised: 16 Apr 2023

See all articles by Giulia Canzian

Giulia Canzian

European Union - JRC-Ispra, European Commision; CESifo (Center for Economic Studies and Ifo Institute)

Samuele Poy

Catholic University of the Sacred Heart of Milan

Simone Schüller

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute; Institute for the Study of Labor (IZA); FBK-IRVAPP

Abstract

This article analyzes the causal impact of advanced broadband accessibility on firm performance. We exploit a unique local policy intervention of a staged broadband infrastructure installation across rural municipalities in the Province of Trento (Italy), generating a source of exogenous (spatial and temporal) variation in the provision of next-generation broadband technology (ADSL2+).Employing a difference-in-differences strategy and using longitudinal firm-level data on annual balance sheet information of corporate enterprises, we show that ADSL2+ availability is associated with a significant increase in annual sales turnover of about 40 percent and an increase in value added of roughly 25 percent over the period of two years. The positive effect is found to be rather stable for different lengths of treatment exposure and across industrial sectors. However, no significant effects are found with respect to number of employees. Placebo estimations support a causal interpretation of our results. Overall, established corporate enterprises in 'underserved' rural and remote areas appear to profit considerably from enhanced broadband delivery programs in terms of economic performance.

Keywords: regional development, quasi experiment, firm performance, broadband internet

JEL Classification: O33, J24, L24, L26

Suggested Citation

Canzian, Giulia and Poy, Samuele and Schüller, Simone, Broadband Diffusion and Firm Performance in Rural Areas: Quasi-Experimental Evidence. IZA Discussion Paper No. 9429, Available at SSRN: https://ssrn.com/abstract=2675486 or http://dx.doi.org/10.2139/ssrn.2675486

Giulia Canzian (Contact Author)

European Union - JRC-Ispra, European Commision

Via Enrico Fermi 2749, Ispra, VA
Ispra (VA), 21027
Italy

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Samuele Poy

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Simone Schüller

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

FBK-IRVAPP ( email )

via Santa Croce 77
Trento, 38122
Italy

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