COUNCIL OF ECONOMIC ADVISERS ISSUE BRIEF

MARCH 2016

THE DIGITAL DIVIDE AND ECONOMIC BENEFITS OF

BROADBAND ACCESS

Introduction

This issue brief provides an overview of the state of 

broadband in the United States using the most recent 

data available from the 2014 American Community 

Survey and building on the Council of Economic Advisers’ 

previous analysis of the digital divide.1 Much progress 

has been made connecting Americans to broadband 

Internet, but a substantial digital divide remains. This 

brief reviews the benefits of Internet connectivity,

highlighting one in particular—better labor market 

outcomes—that can accrue to American workers from 

accessing broadband Internet, especially through online 

job searches. Addressing the remaining digital divide will 

require a focus on affordability—which can be addressed 

by a range of measures including policies to foster more 

competition between broadband providers—as well as 

on access to devices, and digital literacy. 

The main findings highlighted in the issue brief include:

• The number of U.S. households subscribing to the 

Internet has risen 50 percent from 2001 to 2014, and 

three-quarters of American households currently 

subscribe;

• A digital divide remains, however, with just under 

half of households in the bottom income quintile 

using the Internet at home, compared to 95 percent 

of households in the top quintile;

• Supply-side factors may also have an important 

influence on the rate of broadband subscription: 

areas with more wireline providers have higher 

Internet subscription rates;

• Broadband provides numerous socio-economic 

benefits to communities and individuals,

 1 The speed required for an Internet plan to be categorized 

as “broadband” is ever-evolving, both in terms of the 

official FCC definition (currently speeds of 25 Mbps 

download and 3 Mbps upload) and in terms of the speed 

required to derive maximum value from using the 

improving labor market outcomes for subscribers, 

increasing economic growth, providing access to 

better health care, and enhancing civic participation;

• Academic research shows that using online job 

search leads to better labor market outcomes, 

including faster re-employment for unemployed 

individuals, yet because of a digital divide, lowincome households are less able to use these tools 

than high-income households;

• Unemployed workers in households with Internet 

were 4 percentage points more likely to be employed 

one month in the future than those in households 

without Internet. This difference persists over time.

State of Broadband in the United States

Since 2009, more than $260 billion has been invested in 

broadband infrastructure, largely by the private sector 

but also by the public sector. Investments from the 

Federal Government alone have led to the deployment 

or upgrading of over 115,000 miles of network 

infrastructure. The President has announced concrete 

steps to ensure that fast and reliable broadband is 

available to more Americans at the lowest possible cost, 

and these initiatives are bearing fruit. For example, in 

2013 roughly 40 million students lacked access to 

broadband at their schools and, in response, the 

President’s ConnectED initiative was created to help 

connect 99 percent of American students to high-speed 

broadband in their classrooms and libraries by 2018. 

Data from 2015 show that since ConnectED was 

launched in 2013, an additional 20 million students and 

1.4 million teachers now have access to fast broadband 

Internet. In recent years studying the effect of Internet 

use on outcomes such as job search has essentially 

become equivalent to studying the effect of broadband 

use, again because of the speeds required to get the most 

out of Internet-based platforms. 
2

in the classroom, about halfway to ConnectED’s goal.2 As 

another example, in July 2015, the U.S. Department of 

Housing and Urban Development unveiled 

ConnectHome, a new initiative involving communities, 

the private sector, and the Federal Government, 

designed to expand broadband access to more families 

across the country. The pilot program launched in 27 

cities and one tribal nation and will initially reach over 

275,000 low-income households, including 200,000 

children.

Analysis of recently released data from the American 

Community Survey (ACS)3 presented in Table 1 indicates 

that the percent of U.S. households who subscribe to the 

Internet continues to increase. In 2001, 51 percent of 

 2

These data are available through Education

Superhighway’s 2015 State of the States report.

3 The 2014 American Community Survey data, released in 

December 2015, are the most recent ACS data available. 4 The ACS defines Internet access as whether “anyone in 

this household uses the Internet from home.” The results 

and overall trends in the data are qualitatively similar even 

when instead analyzing the question of whether or not the 

individual used the Internet at all over the past year, 

irrespective of having a subscription. Between 2012 and 

2013, Census switched from using the Current Population 

Survey to the American Community Survey as their 

U.S. households subscribed to the Internet; this number 

has risen to over 75 percent in 2014.4 Minority 

households saw even larger gains over this time period. 

For example, households with a Black or Hispanic head 

of household both saw their rate of Internet 

subscriptions double from 2001-2014 (compared to a 50 

percent increase for all households).5

Challenges remain, however. As indicated in Table 1, 

Black, Native American, and Hispanic households report 

lower Internet subscription rates compared to national 

averages. Households headed by individuals with a high 

school education or less also report lower Internet 

subscription rates. These racial and educational 

attainment disparities are indicative of a digital divide. 

primary measure of Internet use, as the latter facilitated 

measurement at a higher level of geographical resolution. 

As a result, the magnitude of the increases in adoption 

rates observed between years on either side of this break 

may not be precisely measured. In addition, the number 

of observations for Native American households in these 

samples is so small that the exact magnitude of year-toyear increases in their adoption rates may also be 

imprecisely measured. 

5 “White alone” indicates that the heads of household are 

white only, and similarly for the other categories.

2001 2003 2007 2009 2013 2014

All Households 50.6 54.7 61.5 68.7 74.4 75.8

Race of head of household

White alone 56.0 59.9 66.7 73.3 77.4 77.6

Black alone 31.0 36.2 44.8 54.2 61.3 63.3

Asian alone N/A 66.7 75.5 80.5 86.6 87.6

Native American Alone 38.5 41.6 41.3 53.4 58.2 58.3

Hispanic of any Race 34.3 36.0 43.2 52.7 66.7 68.5

Educational attainment of head of household*

Less than high school 17.5 19.8 24.0 32.2 43.8 46.0

High school graduate 40.4 43.8 49.5 57.4 62.9 64.2

Some college 57.8 62.6 68.5 74.8 79.1 80.3

College graduate or higher 75.3 78.7 83.6 88.5 90.1 90.9

*Internet access by educational attainment is displayed here for those households where the head of the household is aged 25 or 

older.

Source: Current Population Survey, Census (1998, 2000, 2001, 2003, 2007, 2009); American Community Survey, Census (2013, 

2014); CEA calculations.

Table 1: Percent of U.S. Households with Internet Access, 2001 to 2014 
3

The digital divide was explored in depth in an issue brief

published by the Council of Economic Advisers (CEA) in 

July 2015 that used 2013 ACS data. 

One way to visualize the digital divide in the U.S. is to plot 

how home Internet use varies by household income 

across different areas of the country. In Figure 1 below, 

each dot represents a single area (technically a Public 

Use Microdata Area or PUMA), containing roughly 

100,000 residents. The figure uses data from the 2014 

ACS data (the most current data available) to plot the 

median household income for each area versus the share 

of households in the same area that report using the 

Internet at home. The figure shows a strong positive 

correlation between income and Internet use. Areas of 

the country with higher household income exhibit higher 

home Internet use, and areas of the country with lower 

household income report lower home Internet use. But 

income is not the only factor; it only explains 64 percent 

of the variation in home Internet use and even when 

holding income constant—for example, when comparing 

areas around the average median household income—

the percent of households using the Internet varies by 

plus or minus about 10 percentage points.

Another dimension of the digital divide, though less stark 

than the divide by income, is the difference in Internet 

 6 As a result of this definition, approximately two-thirds of 

the areas are classified as urban, and the remaining onethird as rural.

7 According to the issue brief published by CEA in July 

2015, the spread between the lowest density quartile of 

areas and the highest was 9 percentage points. In contrast 

use between urban and rural populations. For the 

purposes of this brief, areas are defined as rural when 

they have a density of fewer than 1,000 persons per 

square mile and urban when they are above that 

threshold.6 According to data from the 2014 ACS, 

approximately 79 percent of urban households use the 

Internet at home, compared to 74 percent of rural 

households.7

 

Figures 2a and 2b use household level data from the 

2014 ACS to provide additional analysis of the ways in 

which Internet use varies with income. Figure 2a 

indicates that only about 49 percent of households with 

income in the bottom quintile of the household income 

distribution—those households that are earning less 

than $21,700 per year—are using the Internet. In 

contrast, approximately 95 percent of households in the 

top quintile of the income distribution are using the 

Internet. Figure 2b indicates that of the estimated 62 

million Americans not using Internet at home, 

approximately 21 million of them, about 35 percent, are 

in the lowest income quintile.8 These estimates were 

calculated by totaling the number of persons living in 

households in each household income quintile with and 

without internet in the home.

the spread between the lowest income quartile of areas 

and highest was 24 percentage points (Table 2). 8 There are not an equal number of persons in each 

income quintile because the quintile boundaries are 

determined by household income quintiles, and higher 

income households tend to be larger.

20

40

60

80

100

0 50,000 100,000 150,000 200,000

Figure 1: Household Income and Home Internet Use, 2014

Percent Using Internet by PUMA

Median Household Income by PUMA

Source: Census, American Community Survey; CEA Calculations.

49

66

80

89

95

0

20

40

60

80

100

1 2 3 4 5

Figure 2a: Households Using Internet at Home by Income, 2014

Percent of Households

Source: Census, American Community Survey; CEA calculations.

Household Income Quintile
4

Role of Competition 

Addressing the digital divide requires effort on multiple 

fronts, including policies that make broadband more 

affordable (NTIA 2013; GAO 2015). There are substantial 

differences in levels of competition across different 

geographic areas of the United States, which are likely to 

correlate with both service quality (i.e. speed) and price. 

That is, in areas where there is more competition, all else 

equal, we should see higher levels of service quality and 

lower prices which, in turn, should lead to higher 

percentages of Internet usage. Figure 3 plots each area 

by the average number of choices for wireline Internet 

available in the area against the percent of households in 

the area that use the Internet at home.9 In general, there 

is a positive relationship between the number of 

providers (x-axis) and the percent of households using 

the Internet (y-axis). 

 9 The average number of wireline choices for a given 

PUMA is calculated using data from the National 

Broadband Map, a collaboration between FCC and NTIA. 

We calculate this average by taking the sum of the 

It is important to point out that the relationship between 

the number of wireline choices and Internet use in Figure 

3 is a correlation and not necessarily causal. Using 

regression analysis to further investigate the relationship 

between the number of wireline choices and Internet 

use, and controlling for a number of potentially relevant 

demographic variables like income, age, race, education, 

and population density, reveals a statistically significant 

relationship between the number of wireline choices and 

the share of households using Internet at home. That is, 

this result suggests that as the number of wireline 

choices increase, so too does the probability of Internet 

use. This positive relationship has been documented in 

other studies. For example, Kolko (2010) matches data 

from the Federal Communications Commission (FCC) on 

the number of broadband providers at the zip code level 

with data from Forrester Research on the percent of the 

survey respondents in the zip code using broadband. 

Kolko finds a strong positive correlation between the 

number of competing providers and the probability of 

broadband use.

The positive correlation between the number of 

providers and the probability of broadband use is likely 

driven by the increase in competition between providers 

as their number increases, which in turn leads to lower 

prices and/or higher quality offerings. The benefits of 

competition have been documented elsewhere, in both 

international and domestic contexts. A 2014 OECD 

cumulative access rates for each number of wireline 

choices (i.e. the sum of percent of the PUMA with at least 

1 provider, the percent with at least 2 providers, the 

percent with at least 3 providers, etc.).

21

17

12

7

4

25

39

52

64

73

0

10

20

30

40

50

60

70

80

1 2 3 4 5

Without Internet at Home

With Internet at Home

Figure 2b: Persons Using Internet at Home by Income, 2014

Millions of Persons

Source: Census, American Community Survey; CEA calculations.

Household Income Quintile

20

40

60

80

100

0 1 2 3 4 5 6 7

Percent Using Internet

Average Number of Wireline Choices

Source: Census, American Community Survey; NTIA/FCC, Broadband Map; CEA Calculations.

Rural

Urban

Figure 3: Number of Provider Choices and Internet Use, 2014
5

survey of eleven OECD member countries found that 

new entrants in wireless markets have a substantial 

impact on both prices and quality of service, even when 

a market already had several participants (i.e. the fourth 

entrant into a wireless market with three existing 

participants substantially improved costs and services). 

Even the threat of new competition can lead to service 

improvements (Seamans 2012). When Google Fiber was 

to be rolled out in Kansas City, speeds on existing 

networks in Kansas surged 86 percent, which was, at the 

time, the largest year-over-year jump in bandwidth 

observed in any state in 2012 (Talbot 2013). Likewise, 

when Google Fiber indicated it would begin offering 

extremely fast connection speeds in Austin, TX, AT&T 

responded by announcing its own gigabit network (Steffy 

2014). 

Competition can take many forms, including additional 

private Internet service providers, cable companies, and 

even city-owned systems. As envisioned by the 

Telecommunications Act of 1996, the Federal 

Government’s role has been to promote competition 

and reduce regulation for the sake of lower prices and 

higher quality service in “any communications business,” 

which explicitly includes Internet. One potentially 

important source of such competition is that offered by 

municipal providers, whose role the President 

highlighted in Cedar Falls, Iowa in January 2015. Several 

communities have made use of these services, which in 

some localities approaches speeds of 1 Gbps, to 

encourage competition, drive innovation, and save 

consumers money.10

Until recently, some of the communities that have relied 

on municipal broadband to increase competition, 

 10 For more detail on the specific communities 

(Chattanooga, TN, Wilson, NC, Lafayette, LA, Scott 

County, MN, and Leverett, MA, among others) that have 

unveiled this service and the benefits they enjoy, see the 

following Executive Office of the President report: 

https://www.whitehouse.gov/sites/default/files/docs/co

mmunitybased_broadband_report_by_executive_office_of_the_p

resident.pdf

11North Carolina and Tennessee have since sued the FCC 

in the D.C. Circuit. DOJ has formally announced that it 

would not take a position in those cases.

12 A study of OECD countries by Czernich, Falck, 

Kretschmer, and Woessmann (2011) finds that a 10 

percentage point increase in broadband penetration 

namely those in North Carolina and Tennessee, were 

subject to state laws designed to protect private 

broadband providers from government competition. The 

FCC ruled in February 2015 that it would preempt such 

regulations—a move supported by the Administration.11

In doing so, the FCC relied on the broad authorities it is 

granted by Section 706 of the Telecommunications Act 

of 1996 to “promote competition in the local 

telecommunications market, or other regulating 

methods that remove barriers to infrastructure 

investment.” 

Benefits of Broadband

Addressing the digital divide is critical to ensuring that all 

Americans can take advantage of the many welldocumented socio-economic benefits afforded by 

Internet connections. These benefits are most evident 

when consumers have access to the Internet at speeds 

fast enough to be considered broadband; these speeds 

are required to facilitate full interaction with advanced 

online platforms. 

By 2006—before the widespread availability of 

streaming audio and video—broadband Internet 

accounted for an estimated $28 billion in U.S. GDP 

(Greenstein and McDevitt 2011). Nearly half of this total 

was due to households upgrading from dial-up to 

broadband service. By 2009, broadband Internet 

accounted for an estimated $32 billion per year in net 

consumer benefits (Dutz, Orszag, and Willig 2009). These 

findings are broadly consistent with studies that cover 

other countries.12 Broadband expansion is also 

associated with local economic growth in some cases.13

boosts per capita growth rates by 0.9 to 1.5 percentage 

points. A cross-country analysis by Najarzadeh, 

Rahimzadeh, and Reed (2014) finds that a one percent 

increase in the size of a country’s Internet-using 

population increases GDP per employed person by 8 to 15 

dollars.

13 DiMaggio and Bonikowski (2008) use CPS data from 

2000 and 2001 and find that Internet use leads to higher 

wages. Forman, Goldfarb, and Greenstein (2012) show 

investments in broadband infrastructure are correlated 

with wage and employment growth in 6 percent of US 

counties, representing 42 percent of the U.S. population. 

Whitacre, Gallardo, and Strover (2014) find that rural 

broadband adoption in the United States was positively 

associated with income growth between 2001 and 2010 
6

Kolko (2012) finds that growth is particularly 

concentrated in industries that are more IT-intensive and 

in areas with lower populations. In addition, insofar as it 

allows a person to participate more fully in the economy, 

developing Internet skills may even positively affect a 

person’s wages (Goss and Phillips 2002).

Broadband has made medical care and medical 

information more convenient and more accessible. 

Finkelstein, Speedie, and Potthoff (2006) show that 

broadband-enabled virtual visits with trained medical 

professionals can improve patient outcomes at lower 

cost and with a lower risk of infection than comes with 

conventional care provided in person. GAO (2010) finds 

that telemedicine is particularly valuable for rural 

patients who may lack access to medical care, as 

telemedicine allows them to receive medical diagnoses 

and patient care from specialists who are located 

elsewhere. Broadband can also be used to more 

accurately track disease epidemics. Various studies have 

demonstrated how large datasets from search engines 

and social media can be exploited in this way (e.g., 

Ginsberg et al. 2009; Paul and Dredze 2012).

Broadband also enables access to lower-cost online 

education. Deming et al. (2015) find that a 10 percent 

increase in college students taking all their courses 

online is associated with a 1.4 percent decline in 

tuition.14 The importance of the role that the computer 

and broadband more specifically play in enabling 

students to do their homework is evidenced by the fact 

that nearly half of 14 to 18 year olds report that they use 

a library computer, commonly for homework (Becker et 

al. 2010). This finding suggests that library computers can 

provide a crucial source of access for students who 

would not otherwise have the ability to get online.

Research has also highlighted that the Internet has 

become an increasingly important source of information. 

A study by the Pew Research Center finds that the 

number of registered voters who cited the Internet as 

one of their primary sources of news about the 

presidential campaign increased from 11 to 18 percent 

 

and that growth in unemployment rates was lower than it 

would have been in the absence of broadband.

14 However, there is mixed evidence as to whether online 

instruction offers similar quality as off-line instruction. 

Bowen et al. (2014) find little difference in quality, 

whereas Joyce et al (2014) find that students enrolled in a 

between 2000 and 2004 (Rainie et al. 2005). As of 2013, 

50 percent of the public cited the Internet as their main 

source of national and international news (Caumont 

2013). Access to broadband also may increase civic 

participation. Tolbert and McNeal (2003) find that access 

to the Internet was associated with an increased 

probability of voting by 12 percent in the 2000 election. 

Other studies have also found a positive association 

between Internet access and voting behavior, though 

effect sizes have been smaller (Boulianne 2009).

As noted in the FCC’s National Broadband Plan (FCC 

2010), broadband can provide other benefits as well, 

such as supporting entrepreneurship and small 

businesses, promoting energy efficiency and energy 

savings, improving government performance, and 

enhancing public safety, among others. In addition, 

broadband has become a critical tool that job seekers use 

to search and apply for jobs, as highlighted in more detail 

below.

Online Job Search & Labor Market Outcomes

Broadband can help individuals to search for jobs in a 

variety of ways. They can find openings on job posting 

websites, submit applications and resumes online, and 

communicate with potential employers via email. The 

prevalence of these search methods has increased since 

the early days of the Internet. For instance, from the late 

1990s to 2008, the share of unemployed individuals in 

their 20’s who used the Internet for job search increased 

from 24 to 74 percent (Kuhn and Mansour 2014). 

Furthermore, an increasing share of all job openings now 

advertise through online ads. One estimate suggests that 

in June 2013, online ads were posted for 60 to 70 percent 

of total job openings (Carnevale et al. 2014).15

Data from the Current Population Survey’s (CPS) 

Computer and Internet Supplement and questions on job 

search (the combination of which are available in 1998, 

2000, 2001, 2003, and 2011) indicate that the percent of 

respondents using online job search has increased over 

“traditional” course format scored 2.3 points higher on 

midterms and finals, on average, compared to those 

enrolled in a “hybrid” course format. 15 Online ads are, however, not representative of all job 

openings and disproportionately represent high-skill and 

high-education openings (Carnevale et al. 2014). 
7

time (Figure 4).16 This increase is due to both expanded 

Internet use and an increase in the use of online job 

search among individuals with Internet access. However, 

the incidence of use varies by family income. In 2011, 

respondents in households making more than $75,000 

annually were nine percentage points more likely to use 

online search than those in households making less than 

$20,000. 17

There are many potential benefits to online job search, 

relative to traditional search. The Internet allows 

individuals to search a larger set of job postings and to 

find very specific openings. Transaction costs of 

submission are much reduced; clicking a mouse is less 

costly than printing and mailing applications. Recently, 

online search websites have started using algorithms to 

create better matches between potential employees and 

employers.18 Thus, potential employees as well as 

employers benefit from better matches. These benefits 

all increase the likelihood that online searchers will find 

a better job match while spending less time and effort 

searching. 

 16 The CPS provides some information on computer and 

Internet use in 2007, 2009, 2010, 2012, and 2013 as well, 

but items on job search were not included in those years 

(with the exception of 2012, which lumped job search 

together with job training, and 2013, where discrepancies 

between the questions prevent comparison).

17 Family income is defined as “combined income of all 

family members during the last 12 months. Includes 

money from jobs, net income from business, farm or rent, 

pensions, dividends, interest, social security payments 

and any other money income received by family members 

who are 15 years of age or older.” 

On the other hand, lack of broadband access can be an 

obstacle to finding a job. Recent Pew research indicates 

that job seekers without broadband at home have a 

harder time contacting potential employers, filling out 

online job applications, creating a professional resume, 

and highlighting employment skills on social media 

(Smith 2015). Public libraries have become an important 

resource to help fill the need of job seekers that lack 

broadband at home. Becker et al. (2010) estimated that 

30 million Americans used library computers and 

Internet access to conduct job searches, submit online 

job applications, and receive job-related training in 2009.

Recent academic research finds evidence that one of the 

potential benefits of online job search is that it decreases 

the duration of unemployment spells for online 

searchers. Kuhn and Mansour (2014) find that young 

unemployed individuals who used the Internet in their 

job search from 2005-2008 were re-employed 

approximately 25 percent faster than comparable 

individuals who used only traditional methods. Their 

results are robust to controlling for Internet access, 

cognitive ability, and individual characteristics. There is 

also academic research that finds that it is common for 

employed workers to engage in online job search and 

that employed individuals who use the Internet to search 

for jobs are more likely to transition to a new job 

(Stevenson 2009).19 In addition, Atasoy (2013) finds that 

broadband Internet is associated with higher 

employment rates, especially in rural counties. Dettling

(2013) finds that broadband Internet is especially helpful 

in increasing labor force participation for married 

women.

Figure 5 presents data from the 2010-2013 Current 

Population Surveys on the relationship between use of 

the Internet and the percent of unemployed individuals 

18 For example, eHarmony recently launched an 

employment service that uses algorithms similar to its 

matchmaking algorithms to match potential employees 

and employers based on skills, background, personality, 

and culture (Reaney 2015). 

19 Other studies on the effect of the Internet on individual 

labor market outcomes find positive effects (Choi 2011; 

Bagues and Labini 2009). However, Kroft and Pope (2014) 

find no evidence that the rapid introduction of Craigslist’s 

job boards between 2005-2007 reduced local 

unemployment rates during that same time period. 

0

5

10

15

20

25

30

35

40

1998 2000 2001 2003 2011

0-20 20-40

40-75 75+

Figure 4: Percent of Individuals using Online Job Search

Percent Using Online Search

Source: Current Population Survey Computer and Internet Supplements.

Note: The sample includes all individuals age 16+ with and without access to the internet.

Annual Family

Income ($Thousands)
8

who were later employed.20 (If an unemployed individual 

does not become employed, then that individual either 

remains unemployed or exits the labor force.) Figure 5 

shows that one month in the future, 19 percent of 

unemployed individuals in households where someone 

used the Internet are employed compared to only 15 

percent of individuals in households without Internet 

usage.21 This difference persists and actually increases 

over the next 12 months (46 percent vs. 34 percent 

employed for those in households who do or do not use 

the Internet, respectively).

The differences in the employment outcomes between 

households that do or do not use the Internet in Figure 5 

are statistically significant, meaning there is a low 

probability that the differences are random. The basic 

relationship—where those households who use the 

Internet exhibit better employment outcomes—remains 

even after controlling for a number of demographic 

variables such as age, education, race, and family 

income, as well as the number of weeks that the 

individuals were previously unemployed for. Moreover, 

previously cited research (e.g., Stevenson 2009; Kuhn 

and Mansour 2014) has undertaken sophisticated 

 20 The figure includes all unemployed individuals in the 

Oct. 2010 and Oct. 2012 School Enrollment and Internet 

Use CPS Supplements and the Jul. 2011 and Jul. 2013 

Computer and Internet Use CPS Supplements. These are 

the last four CPS supplements that include home Internet 

access. The figure presents the share of all unemployed 

individuals (not only individuals in their first month of 

unemployment) that are employed in the future. The 

sample weights are scaled such that the sums of weights 

for each year are equal. Although these results are from 

statistical techniques that suggest that at least part of 

these correlations may be causal relationships. 

It is also possible that the labor market benefits of online 

job search have increased over time. In an earlier study, 

Kuhn and Skuterud (2004) do not find lower 

unemployment durations for online searchers in 1998 

and 2000. However, in a more recent paper that finds 

lower unemployment durations, Kuhn and Mansour

(2014) suggest that increases in the labor market benefit 

of online job search over time is due to the technological 

improvements in search websites and the increased 

prevalence of online search.

Social media may be another way that potential 

employees are connecting with employers, making 

online search more efficient than in the past as 

individuals can take better advantage of their social and 

professional networks. Indeed, multiple academic 

studies have documented the benefits of social networks 

on job search (e.g., Granovetter 1995; Cingano and 

Rosolia 2012; Kramarz and Skans 2014). However, it is 

not clear if job seekers who rely solely on mobile devices 

to use the Internet benefit as much as other online job 

seekers. Job seekers who rely solely on mobile devices 

face hurdles that are not faced by other online job 

seekers, including data caps on smartphone plans and 

the difficulty of crafting a resume or applying for a job on 

a device that was not built for extensive text entry (GAO 

2015; Smith 2015). 

Conclusion

This brief highlights that a digital divide persists in the 

United States, even though much progress has been 

made. Notably, just under half of households in the 

bottom income quintile use the Internet at home, 

compared to 95 percent of households in the top income 

quintile. One of the ways to help reduce the digital divide 

is to spur competition between providers. As indicated in 

the post-recession labor market recovery, the effect of 

access is similar across all four years and the previously 

cited academic work finds a positive effect of online job 

search during the pre-recession period. 21 Here Internet access is defined as whether “anyone in 

this household uses the Internet from home.” The results 

are qualitatively similar when instead relying upon 

whether or not the individual used the Internet at all over 

the past year. 

0

10

20

30

40

50

1 2 3 12

No Yes

Percent Later Employed

Source: 2010, 2011, 2012, and 2013 Current Population Survey and CEA calculations. 

Months in the Future

Internet Used 

in Household

Figure 5: Share of Unemployed Individuals who

were Later Employed, 2010-2013
9

this issue brief, and as highlighted by prior research, 

more competition is correlated with higher adoption 

rates. This is likely due in part to competition leading to 

lower prices, making the Internet more affordable. 

Affordability, however, is only one of the reasons for 

non-adoption. Research by the National 

Telecommunications and Information Administration

(NTIA 2013) and the Government Accountability Office

(GAO 2015) indicates that in addition to affordability, 

access to devices and digital literacy—for example, 

understanding how the Internet can be used to access 

job opportunities and engage in civic participation, 

among others—are also important factors driving 

broadband adoption. Effective digital literacy training 

may require place-based or demographically tailored 

interventions, as highlighted by recent research.22

Policies that address these three factors—affordability, 

access to devices and digital literacy—will likely help 

increase broadband adoption, ensuring that more 

Americans are able to take part in the digital economy, 

and share in its economic and social benefits.

Existing economic literature demonstrates a variety of 

these benefits that result from broadband, including 

greater economic growth, higher levels in the quality of 

healthcare and education, and greater civic participation, 

among others. This brief provides additional detail on 

one particular benefit: access to the Internet is 

correlated with better labor market outcomes. This is 

likely due to the ability to search more easily for jobs, 

complete applications online, and engage in networking 

via social media, although each of these underlying 

mechanisms requires further research. The findings on 

the positive effects of the Internet on job search suggest 

that policies that reduce the digital divide will potentially 

improve employment outcomes for Americans.

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