Rural broadband speeds and business startup rates

Using 2014 U.S. nonmetropolitan county‐level data, we explore the relationship between broadband speeds and business startup rates. Rural development policy discussions have presumed that access to broadband has become a necessary, although not sufficient, condition for economic growth and developme...

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Bibliographic Details
Published in:American journal of agricultural economics 2022-05, Vol.104 (3), p.999-1025
Main Authors: Deller, Steven, Whitacre, Brian, Conroy, Tessa
Format: Article
Language:English
Subjects:
Access
Agricultural economics
Bayesian analysis
Broadband
Broadband communication systems
Business
Classification
Data
Dependency
Development policy
Downloading
Economic development
Economic growth
Economics
Entrepreneurship
Mobile computing
Rural development
Startups
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Summary:Using 2014 U.S. nonmetropolitan county‐level data, we explore the relationship between broadband speeds and business startup rates. Rural development policy discussions have presumed that access to broadband has become a necessary, although not sufficient, condition for economic growth and development. The relationship between broadband access on business startups, which are vital to local economic vibrancy, may be key to understanding the link between broadband and growth. In this study, we explore how qualitative features of broadband influence startup rates across different types of industries. To refine our insights into these relationships, we look at broadband by speed (both download and upload coverage across four speed categories). We also consider the importance of mobile broadband availability, which is often ignored in empirical studies. Because of the presence of spatial dependency within the data and the fact that data on business startup rates is limited to the minority of establishments that have employees, we use a Bayesian spatial Tobit estimator. After controlling for a host of variables likely to influence economic growth, we find that broadband coverage does matter and that download speeds tend to be more important than upload speeds. This pattern holds for mobile coverage as well. Perhaps the most important finding is that the results vary across business type: what matters for new businesses in one industry may not matter for other industry classifications. In the end, our results reaffirm the policy notion that access to broadband is increasingly relevant to rural entrepreneurship.
ISSN:0002-9092
1467-8276
DOI:10.1111/ajae.12259