The Impact of Internet Subsidies in Public Schools

Article Source: The Review of Economics and Statistics, Vol. 88, No. 2, pp. 336-347, 2006
Publication Date:
Time to Read: 1 minute read
Written By:

 Jonathan Guryan

Jonathan Guryan

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This paper examines the effects of a federal program aiming to increase public school Internet access.


Policy Relevance:

The E-Rate program is effective in increasing Internet access in public schools, but has not affected test scores.


Key Takeaways:
  • Some policymakers are concerned about unequal levels of Internet access and technological aptitude across public school students.
  • The E-Rate program aims to support Internet access in poorer schools by subsidizing their purchases of computers and related equipment. There are some questions as to its effectiveness:
    • Does the E-Rate program increase Internet access, or just subsidize purchases that would have happened anyway?
    • Do these purchases have any effect on students’ academics?
  • The authors studied California public schools between 1996 and 2000.
    • Subsidies were effective at increasing purchases of computer equipment. A 1% subsidy increased spending by 0.4-1.1%.
    • The effectiveness of the subsidy was larger in urban schools, and schools with a larger minority population.
    • Test scores, a measure of academic performance, were not affected by the subsidies.
    • 68% more classrooms had Internet access in 2000 than would have absent the subsidy.



 Austan Goolsbee

About Austan Goolsbee

Austan D. Goolsbee studies the Internet, the new economy, government policy, and taxes.

He recently returned from Washington where he was the Chairman of the Council of Economic Advisers and a member of the President's cabinet. Before Washington, his research earned him recognition as a Fulbright Scholar and a Sloan fellow. In previous years, he was named one of the Global Leaders for Tomorrow by the World Economic Forum, one of the six "Gurus of the Future" by the Financial Times and one of the "40 under 40" by Crain's Chicago Business.