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The Wage Geography of Brazil after the Reforms


  • Daniel Lederman
  • Claudio Bravo-Ortega
  • Pablo Fajnzylber


What has been the impact of the trade liberalization on the regional and industrial wage structure in Brazil? This paper attempts to shed light on the determinants of the evolution of wages during the period 1986-1999. We approach this question relying on the main insights of the new economic geography of trade and traditional trade theory. The main findings of the paper suggest that there has been significant convergence of wages across regions and industries. Furthermore, we find that wage premia have increased in those regions with higher share of skilled workers or higher average years of schooling. Regarding the role of factor endowments, we find that regions with a higher share of the mining production have increased their wage premia. The impact of the endowment of agricultural land is ambiguous. Finally, we find strong evidence of a decrease in the expected wage-geographical-gradient that should exist towards the economic poles of Mercosur, either Sao Paulo or Buenos Aires. The paper discusses the econometric identification problems faced by the estimation of regression models with fixed effects (by region/industry) with time-invariant regressors, such as the geographic distance of states to Sao Paulo or Buenos Aire

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  • Daniel Lederman & Claudio Bravo-Ortega & Pablo Fajnzylber, 2004. "The Wage Geography of Brazil after the Reforms," Econometric Society 2004 Latin American Meetings 281, Econometric Society.
  • Handle: RePEc:ecm:latm04:281

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    References listed on IDEAS

    1. Tauchen, George & Hussey, Robert, 1991. "Quadrature-Based Methods for Obtaining Approximate Solutions to Nonlinear Asset Pricing Models," Econometrica, Econometric Society, vol. 59(2), pages 371-396, March.
    2. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    3. Gasmi, F & Ivaldi, M & Laffont, Jean Jacques, 1994. "Rent Extraction and Incentives for Efficiency in Recent Regulatory Proposals," Journal of Regulatory Economics, Springer, vol. 6(2), pages 151-176, May.
    4. Lars Peter Hansen & Thomas J. Sargent, 1993. "Recursive linear models of dynamic economies," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
    5. Álvaro Busto & Alexander Galetovic, 2001. "Regulación por empresa eficiente: ¿quién es realmente usted?," Documentos de Trabajo 106, Centro de Economía Aplicada, Universidad de Chile.
    6. Colin Mayer & John Vickers, 1996. "Profit-sharing regulation: an economic appraisal," Fiscal Studies, Institute for Fiscal Studies, vol. 17(1), pages 1-18, February.
    7. Clemenz, Gerhard, 1991. "Optimal Price-Cap Regulation," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 391-408, June.
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    Cited by:

    1. Fally, Thibault & Paillacar, Rodrigo & Terra, Cristina, 2010. "Economic geography and wages in Brazil: Evidence from micro-data," Journal of Development Economics, Elsevier, vol. 91(1), pages 155-168, January.
    2. Mardukhi, Jian, 2010. "The General Equilibrium Wage Impact of Trade-Induced Shifts in Industrial Compositions of Employment in Brazilian Cities, 1991-2000," MPRA Paper 25916, University Library of Munich, Germany.

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    Lederman's Session;

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    • Z0 - Other Special Topics - - General

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