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Hasbi scientific seminar 2017

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Impact of Superfast: Broadband on Local Economic Growth. Empirical Evidence using a Matching Estimator by Maude Hasbi

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Hasbi scientific seminar 2017

  1. 1. Impact of Superfast Broadband on Local Economic Growth Empirical Evidence Using a Matching Estimator Maude Hasbi FSR C&M Scientific Seminar March 24th, 2017 Hasbi Impact of Superfast Broadband on Local Economic Growth
  2. 2. Motivation Superfast broadband is seen as a key enabler for socio-economic development. Many countries have adopted a national broadband plan to ensure the whole coverage of their territory. The US, Australia, Japan, France... We observe a rapid penetration of superfast broadband in urban area. Hasbi Impact of Superfast Broadband on Local Economic Growth
  3. 3. Impact of superfast broadband on local economic growth Using data on more than 36,000 municipalities over 5 years (2010-2014), I estimate whether superfast broadband networks have an impact on local economic growth: Number of companies Number of new companiess 3 main types of non-farm market sectors Individually owned companies I use nearest neighbor matching estimator First step: panel data analyses with fixed effects Robustness checks: difference-in-differences methods Hasbi Impact of Superfast Broadband on Local Economic Growth
  4. 4. Literature review Large number of macro-level studies bring empirical evidence on the positive impact of broadband adoption on economic growth. Gruber et al. 2014: Economic benefits are only marginally appropriable by firms, they mostly spill over to users. Limited empirical evidence of the effect of broadband on economic growth at the local level: Mostly studies concentrate on the impact of broadband on employment (Czernich (2014), Whitacre et al. (2014)) As far as firms are concerned, literature focuses on broadband impacts on productivity and firm performance (Akerman et al. (2015), Bertschek et al. (2013)) McCoy et al. (2016) highlights the existence of a positive impact on new business establishment. Studies focus on the impact of old generation broadband technologies and are realized at a more aggregated local level. Hasbi Impact of Superfast Broadband on Local Economic Growth
  5. 5. Propensity score matching techniques Propensity score matching are non-parametric estimators used to estimate average treatment effect. Yit+1(1), (Yit+1(0)) denotes an outcome which is realized in time t + 1 if municipality i receives (doesn’t receive) at time t a treatment dit = 1 (dit = 0) ATT = E(Yit+1(1) | dit = 1) − E(Yit+1(0) | dit = 1) (1) First term: expected value of Y, in time t + 1, in municipalities in which a treatment has been received in time t, which is observable; Second term: Expected value of the Y, in time t + 1, for the control group, had a treatment been received in time t, which is NOT observable. Hasbi Impact of Superfast Broadband on Local Economic Growth
  6. 6. Propensity score matching techniques: Assumptions Treatment distribution may suffer from a selection bias. Matching estimators seek to reproduce the treatment group among the non-treated group using observable characteristics. The key component in the modeling is to determine the relevant set of matches. Yit+1(1), Yit+1(0) ⊥ dit | X (2) Propensity score techniques represents the conditional probability of receiving a treatment given pretreatment characteristics. Based on an overlap assumption. 0 < Pr(dit = 1 | Xit) < 1 (3) Hasbi Impact of Superfast Broadband on Local Economic Growth
  7. 7. Propensity score matching techniques: Application I assess whether superfast broadband networks have a causal effect on the number of companies operating locally and the creation of new businesses. Paris, Lyon and Marseilles are excluded. Keep municipalities with at least 2,000 inhabitants to define relevant control groups Unlikely to have a superfast broadband by private operators in smaller municipalities Treatment: superfastbbit = 1 if a superfast broadband network has been deployed. To control for potential issues of reverse causality, I use lag variables. Hasbi Impact of Superfast Broadband on Local Economic Growth
  8. 8. Relevant set of matches: panel data with fixed effects company ind construc comm adm new company new ind new construc new comm adm superfast bb 0.0325*** 0.0136** 0.0476*** 0.0271*** 0.0252*** -0.0059 0.0117 0.0256** (0.006) (0.006) (0.006) (0.006) (0.009) (0.018) (0.019) (0.010) income 0.0029** 0.0005 -0.0018 0.0038*** 0.0052*** 0.0059 0.0169*** 0.0035* (0.001) (0.001) (0.001) (0.001) (0.002) (0.004) (0.004) (0.002) estab commserv % 0.0002 -0.0015*** -0.0016*** 0.0008*** 0.0001 0.0033*** 0.0062*** -0.0022*** (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) unemployment -0.0017 0.0017 0.0018 -0.0028** -0.0025 -0.0036 0.0041 -0.0039* (0.001) (0.001) (0.001) (0.001) (0.002) (0.004) (0.004) (0.002) density 0.1876*** 0.1747*** 0.3656*** 0.1563*** 0.1770*** 0.3365** 0.3212** 0.1438* (0.048) (0.047) (0.044) (0.046) (0.067) (0.142) (0.147) (0.077) households 0.2966*** 0.3848*** 0.1701*** 0.3396*** 0.2030*** 0.2041* -0.0899 0.2491*** (0.036) (0.036) (0.033) (0.035) (0.051) (0.108) (0.111) (0.059) y2011 0.0205*** 0.0150*** 0.0154*** 0.0226*** 0.0036 0.0268*** 0.0197** 0.0019 (0.003) (0.003) (0.003) (0.003) (0.005) (0.010) (0.010) (0.005) y2012 0.0392*** 0.0088** 0.0353*** 0.0438*** -0.0280*** 0.0149 -0.0512*** -0.0258*** (0.004) (0.004) (0.003) (0.004) (0.005) (0.011) (0.012) (0.006) y2013 0.0846*** 0.0340*** 0.0830*** 0.0921*** -0.0216*** 0.0451*** -0.0944*** -0.0111 (0.005) (0.005) (0.004) (0.005) (0.007) (0.014) (0.015) (0.008) y2014 0.1406*** 0.0776*** 0.1395*** 0.1551*** -0.1013*** -0.0361** -0.2184*** -0.0872*** (0.006) (0.006) (0.005) (0.005) (0.008) (0.017) (0.018) (0.009) Constant 5.0320*** 2.5535*** 3.2800*** 4.6915*** 3.1519*** -0.0700 0.5269*** 3.1163*** (0.055) (0.054) (0.050) (0.052) (0.077) (0.163) (0.168) (0.089) Observations 24,663 24,663 24,663 24,663 24,663 24,663 24,663 24,663 R-squared 0.156 0.102 0.207 0.187 0.025 0.012 0.059 0.012 Nb municipalities 4,933 4,933 4,933 4,933 4,933 4,933 4,933 4,933 Standard errors in parentheses: *** p < 0.01, ** p < 0.05, * p < 0.1 Hasbi Impact of Superfast Broadband on Local Economic Growth
  9. 9. Relevant set of matches establishmentit+1 : (establishmentit−1), (perc estab commservit), log householdsit−2, densityit−2 unemplit−2, incomeit−3, year (perc uni diplomait−2), (socio professional groupsit−2). (4) new establishmentit+1 : (establishmentit−1), (perc estab commservit), log householdsit−2, densityit−2 unemplit−2, incomeit−3, year (perc uni diplomait−2), (socio professional groupsit−2). (5) company ind construc comm adm new company new ind new construc new comm adm superfast bb 0.0389** 0.0417** 0.0156 0.0376** 0.0489** 0.0738** 0.0270 0.0473** (0.018) (0.021) (0.022) (0.018) (0.020) (0.035) (0.028) (0.019) Observations 24,663 24,663 24,663 24,663 24,663 24,663 24,663 24,663 Standard errors in parentheses: *** p < 0.01, ** p < 0.05, * p < 0.1 Hasbi Impact of Superfast Broadband on Local Economic Growth
  10. 10. Robustness checks Comparison with first stage: panel data analyses with fixed effects Use difference-in-difference methods (double difference between two groups and two time periods) Deployments happen within 5 years, but very few deployment before 2013 Try different specifications (several diff-in-diff) Only significant when time is set in 2012 and 2013 for all deployments Similar results for both specifications Hasbi Impact of Superfast Broadband on Local Economic Growth
  11. 11. Impact of superfast broadband Table: Sum up of effects ATT diff 2012 diff 2013 Panal FE company 3.9% 4.4% 4% 3.3% industry 4.2% 2.6% 2.1% 1.4% construction X 6.8% 6.9% 5.8% comm adm 3.8% 3.7% 3.1% 2.7% new company 4.% 4.3% 4.3% 2.5% n industry 7.4% 2.9% X X n construction X 4.8% 5.1% X n commadm 4.7% 4% 3.8% 2.6% n individual comp 3.4% 3.2% 3.2% 2% n estab comm serv 4.2% 4.1% 4.4% 6% n estab serv hh X X X X n estab serv comp 5.9% X X X X: insignificant Hasbi Impact of Superfast Broadband on Local Economic Growth
  12. 12. Impact of superfast broadband Positive average effect of superfast broadband on the number of establishments locally (average +4%) Especially in the construction (average +6%) and tertiary sectors (average +3%) Positive average effect of superfast broadband on establishments creation (average +3%) Positive average effect on the number of establishment creation in the construction sector (average +5%) Mixed average effect on the number of establishment creation in the industrial sector (average +3% / +7 %) Positive average effect on the number of establishment creation in the tertiary sector (average +3%) Hasbi Impact of Superfast Broadband on Local Economic Growth
  13. 13. Impact of superfast broadband Possible to disaggregate further the tertiary sector for new establishments: Higher positive impact for new establishments operating in the commerce and service sector (average +4% +6%) Not significant for new establishments dedicated to households services As regards establishments dedicated to company services, only significant for ATT (average +6%) Positive impact of the creation of individually owned businesses (average +4%) Hasbi Impact of Superfast Broadband on Local Economic Growth
  14. 14. Thanks a lot Any questions? FSR C&M Scientific Seminar March 24th, 2017 Hasbi Thanks a lot

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