- Dinovelli, Benjamin [Browse]
- Senior thesis
- 123 pages
- Rossi-Hansberg, Esteban [Browse]
- Woodrow Wilson School of Public and International Affairs [Browse]
- Class year
- Summary note
- This thesis seeks to answer two questions: Do increases in Internet access
improve a local area’s economic outcomes? And does the elasticity of this
increase in an area’s economic outcomes differ by income level?
If American public policy is designed to improve economic outcomes, the
answer to the first question seems to be yes. Since 2009, the Department
of Agriculture has given $4.2 billion to subsidize Internet access through
the American Recovery and Reinvestment Act (ARRA). On the local and
state level, governments have invested millions on fiber optic networks to
offer their own Internet. Yet, despite larger government involvement in its
provision, few studies have empirically answered the first question about
its effect in the affirmative, let alone addressed the latter.
I attempt to contribute to the literature by showing causality in case studies
where there was a large increase in Internet access exogenous to economic
outcomes. In particular, I choose three examples: Electric Power Board in
Chattanooga, TN, Pine Telephone Company in Choctaw Nation, OK and
Google Fiber in Kansas City, KS and MO. With American Community
Survey (ACS) data from December 2015, I can see changes at the censustract
level. Using difference-in-differences and least squares regression, I
test to see if increases in Internet access increased four types of economic
outcomes: median income, mean income, population and house value.
I conclude, based on the results of these statistical models, that increasing
Internet access improves incomes in each case study. Although I saw some
increase in house values, it was not consistent across all studies. I also find
that the elasticity of this increase from access differs by income levels. My
results are contradictory. For Electric Power Board, I find that low-income
income areas saw outcomes grow, but for Pine Telephone Company, I find
that only outcomes for high-income areas increase. I suggest that increases
in areas’ incomes can justify government involvement in providing access.
These results have both efficiency and distribution implications for public
policy, as the benefits from Internet access are evident, but not uniform.