Fact of the Week: Increasing Mobile Broadband Speed 10 Percent Boosts Labor Productivity 0.2 Percent

Source: Edquist, Harald., “The Economic Impact of Mobile Broadband Speed,” International Telecommunications Society, June 2021.

Commentary: The pandemic has seen more people telecommuting than ever before. As a result, high-speed Internet has become crucial in facilitating the needs of the present and future labor market. Telecommuting and the digitalization of the service economy have allowed for many new types of employment and trade in services that otherwise wouldn’t be possible. And with faster more reliable Internet, these jobs and services can be performed more efficiently, so more work to be done in a shorter amount of time.

Digital services and teleworking jobs rely on smartphones, tablets, and even laptops, often using portable modems and cellular hotspots instead of fixed Internet connection, so they depend on mobile broadband speeds. To quantify how valuable mobile broadband has become to the performance of today’s workforce, the International Telecommunications Society presents econometric research over both Internet and macroeconomic data from 116 different countries between 2014 to 2019.

Regression modeling from their research shows that mobile broadband speed is strongly significant in raising labor productivity in the following year. Elasticities estimated from econometric findings indicate that a country experiencing a 10 percent increase in mobile broadband speed would enjoy an additional 0.2 percent increase in labor productivity in the following year compared to what it would expect otherwise. If high-speed mobile broadband drives productivity in normal years, then the economic benefits of increasing speeds should be even more pronounced in today’s labor market where so many jobs and services have transitioned to some level of remote work.