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Spatial dynamics of labor markets in Brazil

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  • Chomitz, Kenneth M.
  • da Mata, Daniel
  • de Carvalho, Alexandre Ywata
  • Magalhaes, Joao Carlos
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    Abstract

    There was substantial spatial variation in labor market outcomes in Brazil over the 1990s. 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, the authors estimate spatial labor supply and demand equations describing wage and employment changes of Brazilian municipios. They use Conley's spatial GMM technique to allow for instrumental variable estimation in the presence of spatially autocorrelated errors. The main findings include: (1) a very strong influence of initial workforce educational levels on subsequent wage growth (controlling for possibly confounding variables such as remoteness and climate); (2) evidence of positive spillover effects of own-municipio growth onto neighbors'wage and employment levels; (3) an exodus from farming areas; (4) relatively elastic response of wages to an increase in labor supply; and (5) evidence of a local multiplier effect from government transfers.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3752.

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    Date of creation: 01 Oct 2005
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    Handle: RePEc:wbk:wbrwps:3752

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    Keywords: Labor Markets; Economic Theory&Research; Economic Growth; Municipal Financial Management; Achieving Shared Growth;

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      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
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    Cited by:
    1. Alexandre Xavier Ywata Carvalho & Pedro Henrique Melo Albuquerque & Gilberto Rezende de Almeida Junior & Rafael Dantas Guimarães, 2009. "Clusterização Hierárquica Espacial," Discussion Papers, Instituto de Pesquisa Econômica Aplicada - IPEA 1427, Instituto de Pesquisa Econômica Aplicada - IPEA.

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