Effect of Residential Broadband Internet Diffusion on Industry Composition : Evidence from Japan

In this paper, we estimate the effect of broadband internet roll-out in Japan on industrial structure through its impact on labor force participation and wages by industry. Using the instrumental variable method, which focuses on regional differences in the geographic characteristics that constrain broadband internet supply, we find that the diffusion of broadband internet increased the probability of labor force participation and wages, particularly in the wholesale and service industries. Possible reasons for this include the spread of online shopping, telework, and the potential for improved job match quality