Connecting the Disconnected: Heterogeneous Returns to Broadband Infrastructure Investment
We exploit the engineering-based, staggered rollout of Connect America Fund Phase II to estimate heterogeneous returns to public broadband investment. CAF II raised labor force participation among workers with disabilities, a high search-costs population, by 1.6 percentage points relative to the general population in pre-pandemic data. The differential rises to 4.7 points including pandemic-era observations, exceeding the estimated Americans with Disabilities Act employment effect. Three mechanism tests reject remote work as the operative channel.
Key results
with disabilities, pre-pandemic
pandemic-era data
under CAF II (vs $92K ARRA)
moving to construction
Infrastructure returns concentrate on the demand side.
CAF II broadband raises labor force participation more for high search-cost populations (workers with disabilities) than for the general population. The demand-side heterogeneity dwarfs the supply-side average effect.
The magnitude exceeds the ADA employment effect.
Including pandemic-era observations, the 4.7 pp participation gain for workers with disabilities exceeds the estimated employment effect of the Americans with Disabilities Act, one of the largest population-level disability employment interventions in US history.
Remote work is NOT the operative channel.
Three mechanism tests reject the intuitive story that broadband helps workers with disabilities work from home: (1) telework grew LESS for workers with disabilities than for the general workforce, (2) employment gains are uniform across remote-feasible and non-remote-feasible occupations, and (3) commute reductions appeared only among workers with mobility impairments. The active channel is job search and application through digital labor-market platforms, not remote work.
Cost-per-job is low relative to comparable programs.
Federal cost per additional job under CAF II is approximately $20,800, versus roughly $92,000 per job-year for ARRA infrastructure spending. Digital infrastructure targeted at high-search-cost populations delivers labor-market returns at a fraction of the cost of general infrastructure stimulus.
Policy implication: BEAD and post-BEAD funds should target demand-side gaps.
With $42.45 billion in BEAD deployment funds moving to construction and $21 billion in restructuring savings awaiting NTIA decision, allocating infrastructure by supply-side coverage maps embeds an implicit assumption that a connection is worth roughly the same to everyone who gets one. The evidence rejects that assumption.
Policy briefs
Two derivative policy briefs translate the working-paper evidence for federal-level and state-level audiences currently deliberating billions in broadband infrastructure spending.
The Demand Side of Digital Infrastructure
For BEAD, the $21 billion restructuring savings decision, and the AI-era buildout. Five things policymakers need to know: infrastructure returns are set on the demand side, remote work is not the channel, cost-per-job is favorable, coverage maps are the wrong allocation instrument, and post-BEAD funds should target high-search-cost populations.
Read the brief (PDF) →The Widening Signal for Maine’s Youth with Disabilities
Evidence for the Maine Pathways to Partnership coalition. Maine populated blocks with 25/3 fixed service grew from 72% to 92% between 2014 and 2024. Post-closure employment for VR youth in the best-connected areas is 27%, versus 19% in the least-connected. Maine’s $272M BEAD allocation is now moving to construction.
Read the brief (PDF) →Downloads
Full manuscript (PDF)
National policy brief (PDF)
Maine policy brief (PDF)
Data. Connect America Fund Phase II state-year rollout, Current Population Survey Annual Social and Economic Supplement, American Community Survey, Federal Communications Commission Form 477. Standard errors clustered at Census-block-group level.
Author affiliations. Both authors are at Northwestern University, School of Education and Social Policy. Michelle Yin directs the RISEI Lab. Diego Guerrero is a Lead Economist at RISEI and a Ph.D. candidate at Northwestern.
RISEI Lab research on the labor-market returns to public infrastructure investment. Related: the ABLE Act evidence base on asset-test relief and disability financial inclusion.
See the ABLE research →