Broadband upgrade and firm performance in rural areas: Quasi-experimental evidence

This paper analyzes the impact of advanced (up to 20 Mbps download, up to 1 Mbps upload) broadband accessibility on firm performance by exploiting a unique local policy of a staggered broadband infrastructure upgrade across rural municipalities. In a difference-in-differences framework based on longitudinal balance sheet data for limited companies, we show that ADSL2+ availability is associated with increases in firms’ revenue and total factor productivity (by on average 14.8 and 9.1 percent cumulatively over two years), but not with significant changes in personnel cost or employment. Additional analysis of aggregate administrative data shows no significant impact on the total number of active firms or local employment. Pre-trend evaluations support a causal interpretation. •We estimate the causal effect of ADSL2+ upgrade on local firm outcomes.•We make use of a staged infrastructure upgrade program across rural municipalities.•We employ a difference-in-differences approach.•ADSL2+ availability increases revenues and TFP by 14.8 and 9.1 percent over two years.•We find no significant impact on the number of active firms or local employment.