Abstract: Do firms benefit from high-speed internet if it comes through mobile connections ? Combining panel data on the universe of formal firms in Ecuador alongside information on the introduction of 4G in Ecuadorian counties, I estimate the effects of high-speed mobile internet on employment and wages in firms. To deal with endogeneity arising from the non-random placement of internet infrastructure, I simulate a hypothetical 4G rollout based solely on cost considerations linked to geography, and use it as an instrument. Following the introduction of 4G, employment increases by 7.1% for micro firms in sectors that are the less intensive in the use of digital technologies, with younger workers and men experiencing the largest gains. Wages per worker rise by 3% for micro firms in high digital intensity sectors, and only impact men. I provide suggestive evidence that the effects on employment come from a response at the extensive margin (new users of internet) while effects on wage come instead from a response at the intensive margin (change in internet use by existing users). Overall, high-speed mobile internet positively impacts firm, but firm size and sector matter. Facilitating access to high-speed mobile internet can be important to help micro firms, but might not be effective for larger firms.
Thomas Kokossou, Ph.D. candidate
Department of Economics, McGill University
Montréal, Canada
thomas.kokossou@mail.mcgill.ca
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