Faster Internet Fuels Job Growth in Africa, Says Research from Columbia Business School

NEW YORK, Dec. 18, 2018 /PRNewswire/ -- The expansion of fast Internet in Africa positively affects employment rates in connected areas, according to research from Columbia Business School. The study documented the economic gains from the spread of fast Internet technology and found that in Africa, not only have jobs been created (or saved), but a significant portion of those benefits has gone to the less educated.

Jonas Hjort, the Gary Winnick and Martin Granoff Associate Professor of Business at Columbia Business School and his coauthor, Jonas Poulsen of Uppsala University studied what happened after fiber-optic Internet arrived in Africa, and they discovered that it affected the local workforce in unexpected ways. Rather than replacing "automatable" jobs, as has happened in rich countries, fast Internet led to an increase in employment rates.

While other studies show that fast Internet has widened the wage gap between high-educated and low-educated workers in the West, this research shows that the new Internet infrastructure increased employment rates even for workers with only a primary school degree in the twelve African countries examined. What's more, it raised the productivity of firms, and allowed a considerable increase in the entry of new firms. 

"These findings shed light on how modern information and communications technology can affect employment rates, structural change, job inequality, and firm growth in the poorest region of the world," says Professor Hjort.

This study provides the first causal evidence of job creation through the expansion of broadband Internet in the developing world.  The researchers found that the employment rate for workers in areas covered by inland networks rose by between 3.1 percent and 13.2 percent after the arrival of submarine cables on the coast and high-speed Internet. The rise was driven to a significant degree by individuals without a college degree, likely as a result of Africa's unique labor markets.

"We have clear evidence of the positive impact of high-speed Internet on job outcomes in Africa," says Professor Hjort. "Faster Internet fueled the creation (or saving) of 'good' jobs on the continent, and the people with lower levels of education also benefited."

The research showed the arrival of fast Internet, which brought about greater and cheaper access to information and communication, increased employment rates in Africa, and that in at least some countries this appeared to happen in part due to the technology's effect on firm entry, productivity, and exporting. The study showed that access to fast Internet appears to shift employment shares somewhat towards skilled occupations in Africa.

The Research In-depth

The research The Arrival of Fast Internet and Employment in Africa examined the gradual arrival in African coastal cities of submarine Internet cables from other continents and maps of the continent's terrestrial cable network that connects those cities with Internet users.  The researchers used estimates from three datasets covering 12 countries, which showed large positive effects of the Internet on employment rates. They matched data on Internet speeds in cities across the continent with a wide range of other variables, including firm productivity, proxies for income, and employment status. The data allowed them to compare the experience of highly educated workers to that of less educated workers – and in most countries the latter group also benefited from the boom.

"Our results imply that faster Internet allows firms to create (or retain) a lot of positions that otherwise would not be tenable in Africa, and this tells us something important about the impact of the Internet," says Professor Hjort, "that access to information and communication can help give people with lower education a more secure foothold on the economic ladder, and improve living standards."

To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.

About Columbia Business School

Columbia Business School is the only world–class, Ivy League business school that delivers a learning experience where academic excellence meets with real–time exposure to the pulse of global business. Led by Dean Glenn Hubbard, the School's transformative curriculum bridges academic theory with unparalleled exposure to real–world business practice, equipping students with an entrepreneurial mindset that allows them to recognize, capture, and create opportunity in any business environment. The thought leadership of the School's faculty and staff, combined with the accomplishments of its distinguished alumni and position in the center of global business, means that the School's efforts have an immediate, measurable impact on the forces shaping business every day. To learn more about Columbia Business School's position at the very center of business, please visit www.gsb.columbia.edu.

SOURCE Columbia Business School

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