You are here
The Impact of Broadband Diffusion on the Economic Performance of Micro-firms in Trentino
This research project analyzes the impact of broadband accessibility on micro-firm productivity. We exploit a unique policy intervention of a staged broadband infrastructure installation across rural municipalities in the Province of Trento (Italy), generating a source of exogenous (spatial and temporal) variation in high-speed internet accessibility. We describe the policy and its features in detail and discuss the plausibility of the assumption of quasi-exogenous roll-out timing across municipalities. In particular, we examine a broad range of municipality- as well as firm-level characteristics and find that the data are consistent with such assumption. Finally, we provide a reduced-form analysis mainly based on firm-level survey data from the Panel of Microenterprises in the Province of Trento (PMT) in combination with administrative data on firm performance. Estimates of an intention-to-treat effect suggest that the impact has been positive for firms with relatively high-educated entrepreneurs and insignificant for others. For the former, one additional month of exposure to broadband infrastructure is associated with a 4.7-percent increase in annual sales volume between 2010 and 2012; 15 months of exposure are associated with a 19-percent increase. This result is robust in specifications accounting for firm heterogeneity.