Place-based subsidies and employment growth in rural America: Evidence from the broadband initiatives programme

Abstract

This paper studies the labour market effects of the Broadband Initiatives Program (BIP), a programme authorized by the American Recovery and Reinvestment Act of 2009 to promote broadband deployment, mainly in rural areas. The BIP is one of the largest USDA broadband programmes implemented to date, providing more than $3.4 billion in grants and loans in FY 2010. We investigate the impacts of BIP investments on employment outcomes in BIP-recipient Census tracts compared to similar tracts outside of BIP project service areas between the inception of the programme in 2010 and 2019. We use a quasi-experimental research design that combines difference-in-difference regression with propensity score matching estimation to identify the causal effect of the BIP investments on employment outcomes. We find that the BIP investments had a positive overall effect on employment growth that increased over time. The subsidized investments had a greater effect on employment in startups than in incumbent businesses, in the goods-producing sector and the information and communications technology sector than other sectors, and a greater effect in micropolitan census tracts than tracts located in metropolitan areas or in small town and remote rural locations.