Broadband and Productivity: Structural Estimates for Germany

Abstract

We study the impact of broadband availability on firms' total factor productivity (TFP)using German firm-level data between 2010 and 2015. We adopt a control function approach to causally identify and separately estimate productivity for 46 two-digit manufacturing and service sectors. Over the sample period, broadband availability, measured by 16 Mbps transmission rates, more than doubled in German municipalities. While this increased broadband availability has almost no effect on firms' productivity in manufacturing, it significantly increases TFP in most service sectors. Yet, the size of the effect is heterogenous across industries.

German Financial State Aid During Covid-19 Pandemic: Higher Impact Among Digitalized Self-Employed

“…In this section, we argue that regional disparities in digitalization may exist and that these regional disparities influence the impact of state subsidies for the self-employed, like the emergency aid. The main argument is that a minimum level of digital infrastructure, in terms of available wireline-or mobile-based fast broadband, is needed so that the self-employed are better able to benefit from their investments in digitalization (see for example Akerman et al, 2015, on the relevance of broadband availability for firm performance, or Duso et al, 2021, showing that advanced broadband applications increase firm productivity, and Barrero et al, 2021, on the relevance of internet access on working from home during the COVID-19 pandemic). Digital technologies have strong (direct and indirect) network effects, meaning that the value of using digital technologies increases with a larger number of users, amount of available data, and the installed base (Katz and Shapiro, 1985;Gregory et al, 2021).…”

Let's Switch to the Cloud: Cloud Adoption and Its Effect on IT Investment and Productivity

“…11 These datasets are used in previous studies and are presented in detail there, which is why we do not discuss them in depth here but refer to these studies (e.g. Richter and Schiersch, 2017;Le Mouel and Schiersch, 2020;Duso et al, 2021). Instead, we focus on those questions in the underlying surveys that provide information on cloud computing and investment.…”