Does broadband internet allow cities to ‘borrow size’? Evidence from the Swedish labour market

Abstract

Borrowed size refers to the idea that small cities nearby larger metropolitan centres are able to reap the advantages of large agglomerations, without the agglomeration costs. This study explores whether broadband internet helps such smaller cities to enjoy the labour market benefits of a larger city. Using Swedish micro-data from 2007-2015, together with unique data on broadband, we find suggestive evidence that broadband allows smaller cities to reap such benefits indeed. We find that borrowed size is primarily driven by the overall penetration of broadband in the place of residence, rather than by broadband availability at the residence.