Impact of fast internet access on employment: Evidence from a broadband expansion in China

This paper investigates whether and how broadband internet development affects employment in China. The temporal and spatial variations in Broadband China Strategy implementation allow for applying a staggered difference-in-differences (DID) to identify the intention-to-treat effects of the increased availability of broadband on labor market outcomes. Robust results show that broadband internet development will not affect the employment rate for low- and high-skilled workers. Furthermore, broadband internet development improves low-skilled workers' contract signing, pension, and medical insurance participation by 11.5%, 17%, and 19.8%, respectively but has no significant impact on high-skilled workers. Potential mechanisms can be divided into two aspects. At the micro level, broadband internet development mitigates information friction and increases the probability of online learning for low-skilled workers. Meanwhile, at the macro aspect, adopting broadband Internet enhances firms' productivity where low-skilled workers are most concentrated (manufacturing industry). The heterogeneous results suggest younger and rural workers benefit more. Our findings have great significance in eliminating concerns about broadband investment in developing countries.