Fact of the Week: Every 10 Percent Increase in Broadband Access in China has Increased Productivity by 1.1 Percent and Wages by 4.2 Percent

Source: Shiyi Chen, Wanlin Liu, and Hong Song, “Broadband Internet, Firm Performance, and Worker Welfare: Evidence and Mechanism,” Western Economic Association International, Economic Inquiry, November 5, 2019.

Commentary: Since 2011, the U.S. government has spent over $400 million to provide broadband Internet access to 1.6 million people. A recent study investigated the impact that policies like these can have by examining the construction of broadband infrastructure across China, finding that every 10 percent increase in a regions’s infrastructure increased firms’ productivity by 1.1 percent and workers’ wages by 4.2 percent. Even if rural areas in the United States experience a small fraction of this effect, the benefits would still be massive. The study’s results imply that doubling broadband infrastructure increases productivity by 8 percent and wages by 30 percent.