**Table 7: Contemporaneous and lagged effects of internet access on municipality-level wages by sector and occupational skill level**

|||Municipality-y<br>|ear variation||||
|---|---|---|---|---|---|---|
|Occupational skill terc|ile:|First<br>**lag Internet**||Second<br>**lag Internet**||Third<br>**lag Internet**|
|**Outcome/sector**|**Internet C**|**oef.**<br>**Coef.**|**Internet C**|**oef.**<br>**Coef.**|**Internet Co**|**ef.**<br>**Coef.**|
|ln(wage) - Wholesale & Retail|-0.006|-0.002|0.004|-0.002|||
|ln(wage) - Electric, gas, & water|||||-0.024**|-0.045***|
|ln(wage) - Manufacturing|0.004|0.003|0.029***|0.018*|0.001|0.041***|
|ln(wage) - Public Administration|||||-0.035***|-0.040***|
|ln(wage) - Real Estate|||0.019**|0.016*|0.038*|0.024|
|ln(wage) - Construction|||-0.006|0.006|||
|ln(wage) - Agriculture|0.002|0.005|||||
|ln(wage) - Transport & Storage|||-0.019|0.011|-0.018***|-0.008|
|ln(wage) - Other Soc. Svcs.|0.027**|-0.002|-0.001|0.004|||
|ln(wage) - Health and Social Svcs.|||0.005|0.001|||
|ln(wage) - Hospitality|0.013**|0.013**|||||
|ln(wage) - Education|||||-0.002|0.003|
|ln(wage) - Finance and Insurance|||||0.002|-0.001|
|ln(wage) - Mining|-0.010|0.016|||0.012|-0.049|
|<br>ln(wage)- Fishing|-0.004|-0.010|||||

Note: Estimates based on RAIS employee-employer records aggregated by municipality and year merged to internet access data from the School Census. Outcome measures listed in rows are in natural log. Interpretation of coefficients relate an increase in internet access from 0% to 100% in the municipality to the percent change in the outcome measure. Rows indicate outcome used in a common specification including unreported vectors of municipality and year fixed effects and a constant term. Standard errors clustered by municipality in parentheses. * p<.1, ** p<.05, *** p<.01.

# **IV. Conclusions and policy considerations**

Based on a novel data set that we construct on staggered internet availability by municipality between 2000 and 2014, combined with Brazil’s matched employer-employee data set (RAIS), we find that increased internet access had no statistically significant net economy-wide effect on aggregate employment and a negative effect on average wages, with a reduction in measures of wage dispersion. The absence of economy-wide significant net employment effects masks important shifts in employment from sectors with more limited expansion opportunities—wholesale and retail trade, public administration and (largely publicly-owned) utilities that comprise almost half of the formal workforce in 2010—to sectors with more output expansion possibilities. Employment effects are positive and most pronounced in transport and storage, finance and insurance, real estate and manufacturing industry groups. Importantly, internet adoption in manufacturing industries is moderately inclusive, with positive employment and wage effects across both high and medium-skill workers. On average across municipalities, the two-year cumulative effect of an increase in internet access (from 0 to 100%) is 8.8% and 13.5% on employment, and 4.8% and 4.1% on average monthly wages, for medium- and high-skill occupations in manufacturing industries, respectively.

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