A Decomposition of the Relationship Between Internet Access and Earnings

Abstract

Gains in internet access and quality have increased output and revenue for companies, but these gains are not uniformly distributed across regions, industries, or worker types. I examine county-level wage and income measures on time-dynamic broadband uptake rates, mobile internet access, and local education levels. Datasets from the Census and FCC are combined to construct a rich dataset of all counties in the continental US from 2010-2019. Interaction terms between internet access, duration of access, and educational levels are included to capture the heterogeneous relationship between internet access and wages across across different levels of education. Decompositions of these regressions indicate that only 25% of the differences in wages and income are driven by heterogeneous returns to internet access and education across metro densities, with the majority of the difference determined by the levels of these variables themselves.