New research, conducted by Columbia Business School, find that faster internet leads to higher employment rates in connected areas in Africa. The expansion of fast Internet in Africa positively affects employment rates in connected areas, according to research from Columbia Business School. The study revealed that the less educated population received a significant portion of the benefits of internet technology.
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 fibre-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.
“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 and 13.2 per cent 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 labour 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 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.”