Broadband Access, Telecommuting and the Urban-Rural Digital Divide

A unique data set on home use of computers and the Internet is used to investigate the tradeoffsbetween physically commuting to a work site and telecommuting from home via computers. Thestudy further investigates whether individuals who work from home receive greatercompensation relative to their neighbors who do not telecommute, potentially because theInternet allows more remotely located workers to access higher paid labor markets. Thesequestions are investigated separately over samples of urban and rural workers to determine ifincentives to telecommute differ between more- and less-densely populated areas. Results showthat telecommuting responds positively to local average commuting time and to local access toHigh-Speed Internet service. Differences in broadband access explain three-fourths of the gap intelecommuting between urban and rural markets. Correcting for endogeneity, telecommutersand other IT users do not earn significantly more than otherwise observationally comparableworkers. Instead, it is the already highly skilled and highly paid workers that are the most likelyto telecommute, not that they earn more because they telecommute. The results suggest that asbroadband access improves in rural markets, the urban-rural gap in telecommuting will diminish.The urban-rural pay gap may also decrease if improved broadband access induces some alreadyhighly paid urban workers to move to rural areas.[...]