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The Digital Divide and Economic Benefits of Broadband Access

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Citation Edit

Council of Economic Advisers, The Digital Divide and Economic Benefits of Broadband Access (Mar. 2016) (full-text).

Overview Edit

This issue brief provides an overview of the state of broadband in the United States using the most recent data available from the 2014 American Community Survey and building on the Council of Economic Advisers’ previous analysis[1] of the digital divide.[2]

The main findings highlighted in the issue brief include:

  • The number of U.S. households subscribing to the Internet has risen 50 percent from 2001 to 2014, and three-quarters of American households currently subscribe;
  • A digital divide remains, however, with just under half of households in the bottom income quintile using the Internet at home, compared to 95 percent of households in the top quintile;
  • Supply-side factors may also have an important influence on the rate of broadband subscription: areas with more wireline providers have higher Internet subscription rates;
  • Broadband provides numerous socio-economic benefits to communities and individuals, improving labor market outcomes for subscribers, increasing economic growth, providing access to better health care, and enhancing civic participation;
  • Academic research shows that using online job search leads to better labor market outcomes, including faster re-employment for unemployed individuals, yet because of a digital divide, low-income households are less able to use these tools than high-income households;
  • Unemployed workers in households with Internet were 4 percentage points more likely to be employed one month in the future than those in households without Internet. This difference persists over time.

References Edit

  1. Mapping the Digital Divide.
  2. The speed required for an Internet plan to be categorized as "broadband" is ever-evolving, both in terms of the official FCC definition (currently speeds of 25 Mbps download and 3 Mbps upload) and in terms of the speed required to derive maximum value from using the Internet. In recent years studying the effect of Internet use on outcomes such as job search has essentially become equivalent to studying the effect of broadband use, again because of the speeds required to get the most out of Internet-based platforms.

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