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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

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.

Suggested Citation

  • Alexandre Carvalho & Daniel da Mata & Kenneth M. Chomitz & João Carlos Magalhães, 2005. "Spatial Dynamics of Labor Markets in Brazil," Discussion Papers 1110, Instituto de Pesquisa Econômica Aplicada - IPEA.
    • Handle: RePEc:ipe:ipetds:1110
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    1. Alexandre Xavier Ywata Carvalho & Pedro Henrique Melo Albuquerque & Gilberto Rezende de Almeida Junior & Rafael Dantas Guimarães, 2009. "Clusterização Hierárquica Espacial," Discussion Papers 1427, Instituto de Pesquisa Econômica Aplicada - IPEA.
    2. Daniel da Mata & Guilherme Mendes Resende, 2008. "Skilled Migration And Cities Dynamics: The Case Of Minas Gerais," Anais do XIII Semin·rio sobre a Economia Mineira [Proceedings of the 13th Seminar on the Economy of Minas Gerais], in: Anais do XIII Seminário sobre a Economia Mineira [Proceedings of the 13th Seminar on the Economy of Minas Gerais], Cedeplar, Universidade Federal de Minas Gerais.
    3. Alexandre Xavier Ywata Carvalho & Pedro Henrique Melo Albuquerque & Gilberto Rezende de Almeida Junior & Rafael Dantas Guimarães & Camilo Rey Laureto, 2009. "Clusterização Hierárquica Espacial com Atributos Binários," Discussion Papers 1428, Instituto de Pesquisa Econômica Aplicada - IPEA.
    4. Chauvin, Juan Pablo & Glaeser, Edward & Ma, Yueran & Tobio, Kristina, 2017. "What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States," Journal of Urban Economics, Elsevier, vol. 98(C), pages 17-49.
    5. Chein, Flávia & Assunção, Juliano Junqueira & Lemos, Mauro Borges, 2009. "Custos de Transporte, Urbanização e Desenvolvimento: Evidências a Partir da Criação de Cidades," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 63(3), August.

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