The contribution of US broadband infrastructure subsidy and investment programs to GDP using input-output modeling

Abstract

More than one-fifth of the US population does not subscribe to a fixed broadband service despite broadband being a recognized merit good. For example, less than 4% of citizens earning more than US \$70k annually do not have broadband, compared to 26% of those earning below US \$20k annually. To address this, the federal government has undertaken one of the largest broadband investment programs ever via The Bipartisan Infrastructure Law, with the aim of addressing this disparity and expanding broadband connectivity to all citizens. We examine broadband availability, adoption, and need for each US state, and then construct an Input-Output model to explore the potential structural macroeconomic impacts of broadband spending on Gross Domestic Product (GDP) and supply chain linkages. In terms of macroeconomic impact, the total potential indirect contribution to US GDP by the program could be as high as US \$84.8 billion, \$32.7 billion, and \$9.78 billion for the Broadband Equity, Access, and Deployment program, the Affordable Connectivity Program, and additional programs, respectively. Thus, overall, the broadband allocations could expand US GDP by up to US \$127.3 billion (0.10% of annual US GDP over the next five years). Moreover, the broadband packages within the Bipartisan Infrastructure Law could create up to 230,000 jobs (0.14% labor market increase). We contribute one of the first economic impact assessments of the US Bipartisan Infrastructure Law to the literature.