Impact of Broadband on Employment: Microeconomic Perspective

Broadband technology has significantly transformed work and daily life, enhancing job matching and search efficiency. It enables faster communication, reduces trade costs, improves market information, and facilitates access to larger consumer bases and international value chains. This chapter examines the impact of broadband accessibility on labor markets across different countries, highlighting variations based on income levels and the policy implications. The study finds that broadband access leads to increased employment, with the highest impact in middle-income countries. In low-income countries, full broadband access boosts employment by 1.71 percentage points, while in high-income countries, it increases by 1.63 percentage points. Investment in broadband infrastructure is growing, with substantial funding from the US and Canadian governments. Addressing potential endogeneity, the analysis shows that broadband access contributes to employment growth, with a significant rise in the number of employers and employees per employer. The study also supports the skill-biased technological change model, indicating that broadband adoption increases demand for skilled labor while decreasing opportunities for unskilled workers.