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Spatial dynamics of labor markets in Brazil

Author

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

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.

Suggested Citation

  • Chomitz, Kenneth M. & da Mata, Daniel & de Carvalho, Alexandre Ywata & Magalhaes, Joao Carlos, 2005. "Spatial dynamics of labor markets in Brazil," Policy Research Working Paper Series 3752, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3752
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    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. 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.

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    Keywords

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