• Chart of the Week
  • October 6, 2021

Expanding broadband access

Source: kenny001

The internet has become a ubiquitous part of daily life for many Americans. 

But a large number of low-income families in the United States are still without fast, reliable internet in their homes. In fact, only 56 percent of families earning less than $40,000 a year have a broadband subscription, compared to 86 percent of families earning more than $70,000.

In a paper in the American Economic Journal: Economic Policy, author George W. Zuo finds that this limited access to home broadband has a significant effect on the employment and earnings of poorer Americans. 

Zuo studied a Comcast program called Internet Essentials that heavily subsidizes broadband internet for low-income households. Figure 4 from his paper tracks broadband enrollment and employment among eligible families from 2009 to 2015, before and after the launch of Internet Essentials in 2012.

 

 

Figure 4 from Zuo (2021)

 

All the households in the sample had incomes below 185 percent of the federal poverty line. However, only families with a school-aged child were eligible for the program. The y-axis on the left indicates the employment difference between the two groups. The hollow diamonds show the number of households enrolled in Internet Essentials, indicated by the right y-axis.

Zuo divided the data into two further subgroups: areas with at least 50 percent Comcast coverage (solid black line) and areas with no Comcast coverage (dashed grey line). The solid black vertical bars are 95 percent confidence intervals for the high-Comcast areas only.

The difference in employment between eligible and ineligible households for both subgroups were nearly parallel before the launch of Internet Essentials. But in 2012, the trajectory of high-Comcast areas became positive and quickly outpaced the trajectory of areas without the Comcast program, culminating in a 1 percentage point gap by 2015.

Comparing the differences between these groups using a technique known as triple differences, Zuo estimates that Internet Essentials increased the probability that an eligible low-income individual was employed by nearly a percentage point. The local availability of the broadband access program increased incomes among eligibles by over 1 percent and led to a total benefit of roughly $2,202 for a household that actually enrolled—more than four times the estimated cost to provide the service.

Wired and Hired: Employment Effects of Subsidized Broadband Internet for Low-Income Americans appears in the August 2021 issue of the American Economic Journal: Economic Policy.