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Spatial Dynamics of Labor Markets in Brazil

Author

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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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    References listed on IDEAS

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    Cited by:

    1. 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.

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