Broadband internet access and human capital formation

• Applicant: Professor Dr. Felix Weinhardt, Ph.D.
• Subject Area: Economic Policy, Applied Economics
• Term: from 2015 to 2018
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 272598584

Falling costs of accessing information and communication have been a key driver of market integration both across and within countries. Governments around the world are currently in the process of committing substantial public resources to upgrading information and communication technology (ICT) infrastructure. In the developing world, the focus lies on initial provision of ICT. Consequently, ICT infrastructure is a World-Bank Millennium Development Goal (target 8.F). In the developed world, the focus lies on increasing available broadband connection speeds. In October 2012 the European Union budget revealed an investment of 7bn Euros (roughly $9.5bn) earmarked for increases in available internet speeds across European countries. In the US, President Obamas 2008 campaign promised that every American should have the highest form of broadband access. In this context, the socio-economic consequences of ICT have become a topic of great policy interest, and a rapidly growing field of economic research. This project aims to answer the following question: How do falling costs of accessing information and communication affect human capital formation? This project combines unique administrative test score records for the population of English primary and secondary school students with information about available internet speed at student home addresses to contribute to our understanding of this question. In the first step, we use data from UK internet providers to estimate the technological relationship between residential distances to connected telephone exchange stations and internet connection speeds. In the second step, we estimate the relationship between student home address distances to connected exchange stations and educational achievement in nationally representative test scores. To base estimations on plausibly exogenous variation in students internet exposure, we compare outcomes within small geographical neighborhoods that are connected to different exchange stations, and report results before and after controlling for a rich set of individual student and geographic controls, including house price differences. Using this strategy and exploiting the richness of our administrative data, we can also fully explore potential heterogeneous effects, i.e. if effects differ by gender, income and/or other background variables. All in all, we aim to provide the first robust and comprehensive account on how increasing access to information and communication technology affects human capital production, based on administrative data spanning several cohorts of the English student population. Based on our results of the effects of access to ICT on education, we will further show how the estimation results can be used to evaluate the cost effectiveness of a number of current telecommunication policy proposals on first broadband provision and increasing speeds in the developing world, Europe and the US, relative to more traditional education investments.

• DFG Programme: Research Grants
• International Connection: United Kingdom, USA
• Co-Investigators: Professor Dr. Benjamin Faber; Rosa Sanchis-Guarner, Ph.D.