NDN/NPI Releases New Paper: The Employment Effects of Advances in Internet and Wireless Technology

Today, NDN/NPI is proud to release a major new paper authored by leading economists Rob Shapiro and Kevin Hassett, "The Employment Effects of Advances in Internet and Wireless Technology: Evaluating the Transitions from 2G to 3G and from 3G to 4G."  You can find a PDF of the full paper here.  The paper's executive summary is below.  And to hear directly from the authors about the paper, come see them in person in Washington on Thursday, or participate in a live web video briefing/discussion later that afternoon.  You can learn more about each presentation or RSVP here.


The Executive Summary

Continuing investments to upgrade the wireless broadband Internet infrastructure, including the transitions from 2G to 3G wireless technologies, and now from 3G to 4G, had produced cascades of innovation. Based on previous advances, the current transition to 4G technologies is likely to spur significant new job creation and growth which could help the American economy restore gains in incomes and business investment. New econometric analysis set forth in this study shows that the investments and innovation entailed in the transition from 2G to 3G wireless technologies and Internet infrastructure spurred the creation of some 1,585,000 new jobs from April 2007 to June 2011. The investments being undertaken today to upgrade wireless network and Internet technologies from 3G to 4G hold comparable promise for job creation. This analysis estimates that under the current transition, every 10 percent increase in the adoption of 3G and 4G wireless technologies could add more than 231,000 new jobs to the U.S. economy in less than a year.

Based on the substantial economic benefits arising from advances in wireless broadband infrastructure and the adoption of devices that take advantage of that infrastructure, national policy should actively promote the rapid deployment and broad adoption of 4G wireless broadband.

Wireless Advances Created Jobs Even in Recession

Applying a unique database that provides detailed information on the ownership of mobile devices that operate on successive generations of wireless infrastructure, to state-by-state employment data, the authors of the study show:

  • The adoption of cell phones and other mobile devices supported by a shift from 2G to 3G Internet and wireless network technologies led to the creation of nearly 1.6 million new jobs across the United States, between April 2007 and June 2011 – even as total private sector employment fell by nearly 5.3 million positions.

  • The rapid transition from 3G to 4G mobile broadband networks should continue to stimulate new job creation in a short time frame, generating more than 231,000 jobs for every 10 percentage point gain in penetration rates within a year. 

The research found that a 10 percentage point gain in penetration of a new generation of wireless technology in a given quarter leads to a 0.07 percentage-point gain in employment in the following quarter and continuing gains in subsequent quarters. These results suggest that a national job creation strategy should include or encourage appropriate measures to accelerate the deployment of 4G infrastructure.

4G Can Help American Meet Its National Broadband Goals

In addition to jobs gains, which the authors verify with five additional statistical tests, widespread deployment of 4G technology could help the country achieve universal broadband service by ensuring that this service becomes quickly available to many rural Americans who currently lack high-speed connectivity. 4G-enabled mobile services also could provide a less costly way for lower- and moderate-income Americans to access broadband.

The advent of new generations of wireless technology will also enhance the overall benefits of Internet connectivity and related advances in information and communications technologies (ICT). The McKinsey Global Institute, for example, has estimated that the Internet contributed about three percent to global GDP in 2009 and was responsible for 21 percent of U.S. GDP gains over the last five years.

This study also documents how the transition from 2G to 3G enabled or promoted the development of new products, services and industries. It further examines how the current, ongoing shift to 4G wireless infrastructure may open the door to a wide range of additional applications, services, products and new industries. These developments should generate or promote economic gains at least comparable to those produced by the build-out and adoption of 3G technologies.

Investments in 4G mobile wireless technologies and infrastructure networks hold particular promise in areas such as online retail, health care, energy, and business services.

  • Mobile e-commerce, for example, increased several-fold in recent years, growing from about $1.4 billion in 2009 to between $6 billion and $9 billion in 2011 according to ABI Research. The shift to 4G can be expected to accelerate this growth.

  • Savings from the wide use of electronic medical records created and accessed wirelessly, along with other “mHealth” apps, could total some $15 billion a year using current wireless technologies, and those savings would also grow as 4G apps become widely available and used.

  • A national Smart Grid that applied wireless technologies to the nation’s electricity networks could save $20 billion annually by simply reducing power outages, according to the National Energy Technology Laboratory. A 4G-based Smart Grid would save an additional $10 billion by further reducing the incidence of power failures.

  • Cloud-based services, which are gaining rapidly in popularity, also would benefit from enhanced 4G wireless. Juniper Research, for example, estimates that the market for mobile-based cloud services could reach $39 billion by 2016, assuming wide deployment of 4G infrastructure and devices.

Policymakers Should Encourage Private Sector Investment in 4G Wireless Technologies

The rapid deployment of 4G technologies and the innovations that will accompany them should generate significant and widespread societal gains, including a stronger economic recovery and expansion from the recent recession. Policies to promote the full deployment of 4G, therefore, should be part of any national job creation and economic strategy.