Monday, November 25, 2013

The determinants of agglomeration in Brazil: input-output, labor and knowledge externalities

Aguinaldo Maciente is a great colleague of mine at Ipea. He finished his PhD at Illinois (Urbana-Champaign) a few months ago. It could be particularly interesting to those readers working in Regional Science, Migration studies, Labor Markets and Geographic Labor Mobility.

Thesis: The determinants of agglomeration in Brazil: input-output, labor and knowledge externalities.

This research investigates industry agglomeration and coagglomeration patterns in Brazil, and assesses their association with the Marshallian forces that are commonly viewed as sources of agglomeration economies, namely the input-output and labor pooling externalities. Knowledge externalities, the third classic source of Marshallian agglomeration economies, are partially captured through labor-embodied knowledge usage. [...] The ONET database, which contains several skill measures for US occupations, is matched with Brazilian occupations and factor analysis is used to produce a set of ONET skill and knowledge groups. These skills groups are intended to describe the labor profile of industries and regions and constitute the basis for measures of labor and labor-embodied knowledge externalities for pairs of industries. The measures of input-output linkages and labor-use similarity are related to the observed agglomeration and coagglomeration patterns, in order to test for the possible sources of agglomeration economies in Brazil. Results indicate that Brazil has agglomeration levels, as measured by Ellison and Glaeser’s (1997) agglomeration index, that are slightly decreasing over time, but comparable to the international experience. However, the components of the agglomeration index reveal that Gini-type regional employment concentration and plant-level employment concentration are relatively high, despite their decrease from 1994 to 2010. That is, Brazil has most of its employment concentrated into relatively fewer regions and plants, when compared to results found in the literature, for example, for the United States. [...] Overall colocation patterns in Brazil seem to be more associated with labor and labor-embodied knowledge externalities than with input-output externalities. Natural advantages, such as agricultural and mining potential and road density are also positively associated with observed coagglomeration [...]

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