The Great Recession hit rural America hard. Roughly a decade later, even before the pandemic, employment still hadn’t recovered, income was 35% lower than urban areas, and population was declining. One key to the return of thriving small towns may be broadband, and the technology may also be critical for creating a more diverse and dynamic local economy in rural areas.
Our recent research looks at the effect of broadband access on entrepreneurship in rural counties. Specifically, we look at the intersection of broadband on different sizes of business start-ups and the unique effect it has on female entrepreneurs.
One result was expected: all things equal, more broadband means more business. For businesses that have paid employees, we found that better-than-average broadband access, in the typical rural county could lead to anywhere from eight to 20 new start-ups. Connectivity was even more important for the smallest of businesses. For new businesses with no paid employees, or nonemployer businesses, more broadband could generate an additional 65 new businesses.
The bulk of that growth was driven by those nonemployer start-ups. These are often part-time or sporadic gigs such as the woman down the street running a dog kennel in her home, and the retired man hosting a website for his one-car taxi service to the regional airport. Both businesses rely on social media or internet-based marketing.
In rural counties with less foot traffic, broadband can provide a tool to market a business. In a world forever changed by Covid-19, which has ushered in new norms around remote work, the value of broadband is even clearer.
While our finding that more broadband means more start-ups matches our expectations, the importance of broadband to female entrepreneurship is something new. Our results show that as access to broadband increases in rural counties, so do the number of female entrepreneurs.
This trend is again driven by part-time gigs. Other research has shown that women tend to view their businesses as secondary, not primary sources of income. Female entrepreneurs are also more driven by family life, especially when they have young children, often serving as primary caregivers and preferring the flexibility that self-employment provides. These trends all point to women working from home more often – where access to broadband is essential.
Of course, availability of broadband infrastructure is one thing. Affordability and knowing how to start a business on the internet is another. While our study is evidence that increasing broadband access is important for entrepreneurship and women-led business, rural communities need to think about all barriers to getting connected.
Teresa Conroy is with the University of Wisconsin-Madison, and Sarah Low is with the University of Missouri-Columbia.
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