The role of broadband speed availability in business survival and employment

This paper estimates the relationship between broadband internet speeds and the survival and employment of business establishments. The analysis combines publicly accessible broadband speed availability data from the Federal Communications Commission (FCC) with microdata on over 10 million U.S. businesses from the National Establishment Time Series (NETS) database across 2015 to 2020. We use a two-stage Heckman procedure to identify and correct for attrition bias resulting from businesses that exit the dataset over the study period. Probit models estimate business survival in the first stage. The second stage then uses first-difference regression to control for business-level fixed effects and estimate how employment changes as faster speeds become available. The results show that expectations about future broadband speeds positively affect establishment survival; however, there is no support for the hypothesis that faster speeds are systematically associated with aggregate-level business-level employment changes. Subpopulation models show modest correlations between employment and broadband availability that differ by business size, age, and industry, with the strongest relationships observed among younger and smaller firms.