Does State Aid for Broadband Deployment in Rural Areas Close the Digital and Economic Divide?
34 Pages Posted: 17 May 2018
There are 2 versions of this paper
Does State Aid for Broadband Deployment in Rural Areas Close the Digital and Economic Divide?
Date Written: March 21, 2018
Abstract
We evaluate the impact of a major European state aid programme for broadband deployment applied to rural areas in the German state of Bavaria in the years 2010 and 2011. Using matched difference-in-differences estimation strategies, we find that aided municipalities have – depending on broadband quality – between 18.4 and 25.4 percentage points higher broadband coverage than non-aided municipalities. This increase in broadband coverage, closing the digital divide, results in an average increase of six employed individuals living in the respective aid-receiving municipalities while leaving the number of employed (measured at the place of work) or self-employed individuals and wages unaffected. We therefore conclude that an increase in broadband coverage through state aid protects rural areas from depopulation, but does not contribute to a further closing of the economic divide in the form of creating new jobs.
Keywords: government policy, state aid, ex-post evaluation, broadband, employment, rural areas, European Union, Germany, Bavaria
JEL Classification: D620, D730, G380, H230, J230, K230, L520, L960, L980, R230
Suggested Citation: Suggested Citation