Regarding the types of policies that could help offset the uneven sectoral negative employment impacts of internet rollout that we have found, and the negative effects on unskilled workers that Akerman et al. (2015) have found,<sup>4</sup> there is an important policy thrust to emphasize in addition to the presence of job training and other input-support programs that should be responsive to the changing market needs of new and growing firms. As highlighted in Brambilla’s (2017) useful conceptual framework, internet rollout and the attendant ICT adoption by firms can generate output-expansion effects that, if sufficiently large, will increase firm labor demand of both skilled and unskilled workers, more than offsetting the substitution effects from unskilled to skilled workers, and even the partial replacement of skilled workers by ICT investments to the extent that skilled workers and ICT are substitutes in specific industry groups. It is striking that the statistically significant employment effects by industry group in Brazil are consistently positive only for manufacturing, transport and storage, finance and insurance, and hospitality, which are industry groups that seem likely to be composed of firms that are able to take advantage of opportunities to sell more as their marginal costs decline, both in terms of more sales within Brazil outside of the municipality and more exports (either directly or indirectly). Public administration does not sell in any market so its mission and activity levels are not likely to be responsive to lower marginal costs, at least not in the short or even medium term. Thus, there it is no surprise that substitution effects predominate. As for wholesale and retail occupations, what those workers help to sell is not likely to have sales prices that are much diminished as the costs of retail and wholesale services decline. Thus, it is likely that the activity levels of these occupations that are demanded in the market are not elastic with respect to the costs of producing the services of retail and wholesale workers and the ICT they may utilize. So, output effects are likely small or non-existent, and substitution effects are expected to predominate, as confirmed by our analysis.

One important policy perspective that is beyond the scope of this paper is what becomes of the displaced workers in public administration and in the retail and wholesale services occupations. Do they move into jobs in sectors where they are more relatively productive? Do the sectors that can adopt ICT and elevate their outputs more effectively wind up employing those displaced, if not in the same year as the ICT

> 4 Akerman et al. (2015) exploit rich Norwegian data to answer similar questions to our study. In Norway, a public program with limited funding rolled out broadband access points, and provides plausibly exogenous variation in the availability and adoption of broadband internet in firms. Their results suggest that broadband internet improves (worsens) the labor outcomes and productivity of skilled (unskilled) workers. They explore several possible explanations for the skill complementarity of broadband internet. They find suggestive evidence that broadband adoption in firms complements skilled workers in executing non-routine abstract tasks, and substitutes for unskilled workers in performing routine tasks.

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