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Spatial Dynamics of Labor Markets in Brazil

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  • Alexandre Carvalho
  • Daniel da Mata
  • Kenneth M. Chomitz
  • João Carlos Magalhães
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    Abstract

    There was substantial spatial variation in labor market outcomes in Brazil over the 1990?s. In 2000, about one fifth of workers lived in apparently economically stagnant municipios where real wages declined but employment increased faster than the national population growth rate. More than one third lived in apparently dynamic municipios experiencing both real wage growth and faster-than-average employment growth; these areas absorbed more than half of net employment growth over the period. To elucidate this spatial variation, we estimated spatial labor supply and demand equations describing wage and employment changes of Brazilian municípios. We used Conley?s spatial GMM technique to allow for instrumental variable estimation in the presence of spatially autocorrelated errors. Chief findings include: a very strong influence of initial workforce educational levels on subsequent wage growth (controlling for possibly confounding variables such as remoteness and climate); evidence of positive spillover effects of own-municipio growth onto neighbors? wage and employment levels; an exodus from farming areas; relatively elastic response of wages to an increase in labor supply; and evidence of a local multiplier effect from government transfers.

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    Bibliographic Info

    Paper provided by Instituto de Pesquisa Econômica Aplicada - IPEA in its series Discussion Papers with number 1110.

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    Length: 40 pages
    Date of creation: Aug 2005
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    Handle: RePEc:ipe:ipetds:1110

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    1. Glaeser, E.L. & Scheinkman, J.A., 1993. "Economic Growth in a Cross-Section of Cities," Harvard Institute of Economic Research Working Papers 1645, Harvard - Institute of Economic Research.
    2. Magalhães, André & Hewings, Geoffrey J.D. & Azzoni, Carlos R., 2005. "Spatial Dependence and Regional Convergence in Brazil," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 6, pages 5-20.
    3. Carlos R. Azzoni & Luciana M.S. Servo, 2002. "Education, cost of living and regional wage inequality in Brazil," Review of Economic Design, Springer, vol. 81(2), pages 157-175, 04.
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    14. Alexandre Carvalho & Daniel da Mata & Kenneth M. Chomitz, 2005. "Estimation of Multiequation Cross-Section Models in the Presence of Spatial Autocorrelation," Discussion Papers 1111, Instituto de Pesquisa Econômica Aplicada - IPEA.
    15. Fiess, Norbert M. & Verner, Dorte, 2003. "Migration and human capital in Brazil during the 1990s," Policy Research Working Paper Series 3093, The World Bank.
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