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.

Abstract:

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 [...]

Assorted Links

1. A renewed look at Europe's population distribution (high resolution map)
   
   
2. Transport costs in the Roman Empire (via Leo Monasterio)
   
   
3. Like camels with tatoos
   
   
4. How many countries already face shrinking population?
   
   
5. What does your smart phone say about much sex you have had?
   
   
6. Live map with every cargo ships around the world (via Leo again). And a nice visualization of shipping in the Baltic Sea.
   
   
7. Labor productivity Around the World
   
   
8. The First Economist

Assorted Links

1. What if all hte ice melted?
   
   
2. A Gray Future for the BRICsLike OCR for maps: Automating Extracting GIS Data from Scanned Maps (via @QUBDH @digitalurban)
   
   
3. Female Employment and Fertility in China
   
   
4. Chinese food Density by Neighborhood in NYC (via Untapped Cities)
   
   
5. Perfecting bike share schemes via (HumanScaleCity)
   
   
6. Golf Ball 70,000fps 150mph
   
   
7. Autonomous vehicles and self-driving buses closer to reallity (via MR)
   
   
8. Map of scientific collaboration between researchers (old stuff but still interesting)

Demographic papers published on Science and Nature

It's not everyday you see demographers publishing on journals like Science and Nature. So here is a short list with some of the papers published since 2000.

ps. Massive presence of @IIASAVienna and @WiCVienna researchers!

• (2013) Pervasive Externalities at the Population, Consumption, and Environment Nexus, by Partha S. Dasgupta, Paul R. Ehrlich
  
  
• (2012) Demography's Role in Sustainable Development, Many authors
  
  
• (2011) China’s Demographic History and Future Challenges, by Xizhe Peng
  
  
• (2011) The Demography of Educational Attainment and Economic Growth, by Wolfgang Lutz, Jesus Crespo Cuaresma, Warren Sanderson
  
  
• (2011) 7 Billion and Counting, by David E. Bloom
  
  
• (2008) Health and Urban Living, by Christopher Dye
  
  
• (2008) The coming acceleration of global population ageing, by Wolfgang Lutz, Warren Sanderson, Sergei Scherbov
  
  
• (2006) The Demography of Growing European Identity, by Wolfgang Lutz, Sylvia Kritzinger, Vegard Skirbekk
  
  
• (2005) Average remaining lifetimes can increase as human populations age, by Warren C. Sanderson, Sergei Scherbov
  
  
• (2003) Europe's Population at a Turning Point, Wolfgang Lutz, Brian C. O'Neill, Sergei Scherbov

and my two favorites:

• (2010) Remeasuring Aging, by Warren C. Sanderson and Sergei Scherbov
  
  
• (2011) Global Human Capital: Integrating Education and Population, Wolfgang Lutz, Samir KC
• Interactive Age and Education Pyramids by Country

[Image Credit: Lutz and KC, 2011]

Chart of the Day

A nice piece on The Economist covering India’s demographic challenge.

As some studies have pointed out, the key element in discussing the so called 'demographic dividend' of a country is education, and more education. And of course, in the end, education and aging are crucial for productivity levels.

[Image Credit: The Economist]

Assorted Links

1. GPSing Your Cat
   
   
2. London’s Changing Population
   
   
3. Perhaps you should reconsider your PhD topic (via MR)
   
   
4. Two good reasons to make a trip to China
   
   
5. Is there a shortage of STEM workers in the USA? Yes, No, Depends
   
   
6. Home prices in some U.S. metropolitan areas
   
   
7. The new issue of the Journal of Transport and Land Use is out
   
   
8. "WTF" link: Richard Nixon and Robocop ?!
   
   
9. An old interactive map with lots of info on murders in NY

A demographic projection of engineering workforce

 shameless  self-promotion alert! The Scientific Programme of the XXVII IUSSP International Population Conference is out. Here is my self-recommending paper.

Title:
A demographic projection of engineering workforce in Brazil through 2020

Abstract:

One major hurdle for the Brazilian economy relates to the availability of qualified workforce in key occupations. This paper contributes in this matter presenting a demographic projection of engineering workforce availability in Brazil up to 2020. The projection method we have used adapts the cohort-component method to a simplified model of entries and exits in the labor market. Data from five different public databases available in Brazil were used to run the projections on yearly basis. The method is rather flexible and can be used to project almost any population group with higher education degree from different backgrounds, by sex and age. We draw four scenarios that differ in terms of possible growth rates to be observed in the number of student entries, including a constant enrollment number (CER) variant. The results suggest that Brazilian labor market would have between 1.6 and 2.3 million people holding a degree in engineering fields in the year 2020. Finally, our findings suggest that the claimed lack of engineering workforce in the country might not be a matter of purely quantitative supply, but rather of education quality and geographical concentration of engineering schools and engineering workforce.

See extended abstract.

Educational Attainment and the Demographic Dividend

The Economist Magazine has published a short piece where they highlight Wolfgang Lutz's arguments on the importance of educational attainment to the potential benefits countries may get from their demographic dividend. 

Related Links:

• The changing demographics of Brazilian workforce [this publication is availabe in Portugue only]
• Education-specific population projections

Chart of the Day

The Education Gap in american metropolitan areas 

(by Alan Berube and Jonathan Rothwell - Brookings)

Demographic Cliff

The issue of World Population Bomb is gradually losing ground to other issues such as imploding national populations and aging workforce.

Of course we always find those who sounds extremely pessimistic. Jim Russell (Burgh Diaspora blog), for example, points out to several declining places (low fertility and no migration attraction). According to him, Southern New England Is Dying, Puerto Rico Is Dying, China Is Dying, Germany Is Dying, America Is Dying, Sun Belt Counties Dying, Silicon Valley Is Dying, New York City Is Dying, London Is Dying, San Francisco Is Dying etc etc  ok. We understood, we're all dying anyway 

The McKinsey Global Institute has published a report on how aging populations will reduce global savings (15min audio summary). Other pessimist, Jonathan Last (author of 'What To Expect When No One's Expecting'), trumpets a coming demographic disaster:

"Forget the debt ceiling. Forget the fiscal cliff, the sequestration cliff and the entitlement cliff. Those are all just symptoms. What America really faces is a demographic cliff: The root cause of most of our problems is our declining fertility rate." 

The fact is no one is actually optimistic about current demographic trends. Nancy Folbre (MIT) has a more moderate opinion, although still far from being optimistic.

This post is getting too long for my  time constraint  standards, so I'll end it with this chart by Simon Hedlin and a coulpe of related links.

[Image Credit: Simon Hedlin]

 Related Links:

• Working-age shift in Europe
• Labor productivity vs Demographics
• Will China’s demographic shift force a fall in investment share?
• Addressing China's looming talent shortage
• Assorted Links on Workforce and Education
• Skills deficit holds India back

Assorted Links on Workforce and Education

1. What is a College Degree Worth?
   
   
2. Self-perceptions and college dropout
   
   
3. Fertility rate and female education (the US)
   
   
4. Age transition and working-age population in China - more here
   
   
5. The Role of Skills in a Growth Strategy for the UK
   
   
6. Older, but Not Yet Retired
   
   
7. "The vanishing workforce"
   
   
8. Share of employers that reported recruitment difficulties in 2010

[Image Credit: NYT; Data source: OECD report]

The Economic Future of British Cities

Prof Henry Overman (SERC / LSE) gave a very interesting lecture a couple of weeks ago. The lecture was titled 'The Economic Future of British Cities: What should Urban Policy Do?'

He addressed several issues such as migration, housing, skilled workforce, labor productivity and regional wage disparities, to name a few.

You can download both the lecture and the slides here. You may also go further into Overman's writings on SERC blog - Part I, Part II.

Assorted Links

1. 180 Current trends in inequality in Britain and Worldwide
   
   
2. Forget the Placebo Effect: It’s the ‘Care Effect’ That Matters (via Patricia Morita)
   
   
3. New Head of UN Population Division
   
   
4. Dangers of artificial intelligence: Watson couldn't distinguish between polite language and profanity
   
   
5. Lectureships in Human Geography – University of Bristol
   
   
6. Top 5 city destroyers of all time - of course Godzilla couldn't be out of this list!
   
   
7. Don’t come to Britain posters (via MR)
   
   
8. Jerven on Measuring African Poverty and Progress
   
   
9. The effect of Air Pollution Control on Life Expectancy in the United States
   
   
10. Rainfall Deficit as a predictor of U.S.-Bound Migration from Rural Mexico
    
    
11. Does Human Capital Tend to Cluster in Center Cities or the Suburbs?

[Image Credit: Michelle Hopgood]

How Much Does a Good Boss Really Matter?

A new podcast by S. Dubner talking about this working paper: "The Value of Bosses".
If you're curious about the answer but don't have much time to read the full paper, listen to the podcast or just read the abstract !





ps. I'm not sure if their findings could be applied to universities or research institutions. But why not?

How the U.S. lost out on iPhone Work

@cduhigg and @KeithBradsher for the NYT:

"Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States. In China, it took 15 days"

 This article is  outdated by over a year now  very interesting!

Labor Shortages and Immigration Policy

Martin Ruhs and Lucie Cerna (both from COMPAS) give short talks on immigration policy, labor shortages and highly skilled migrant workers.

The subject of labor shortage in the engineering sector has been receiving an increasing attention in Brazil in the last decade. As we argue here, easing immigration rules to attract foreign engineers might be important to alleviate some local bottlenecks. However, it falls far short of what is needed to properly deal with this issue on a national scale.

If Brazilian authorities are considering taking concrete initiatives to deal with an eventual shortage of engineers in the country, then they should be aware of the following points before choosing any particular policy:

1.      There is a clear labor market matching problem: only three out of ten people with engineering degree actually work in a typical engineering occupation;

2.      Academic drop-out rates are remarkably high among engineering students (51% for women and 59% for men). Besides, addressing this issue is the only way to ensure short-term results;

3.      Possibly, the problem lies rather in education quality than in the quantity of students that the Brazilian education system is able to 'produce';

4.      Any rapid expansion in student intakes could compromise even further potential quality problems and yet, it would only yield results after six or seven years;

5.      Easing immigration rules to attract foreign engineers might play an important role to alleviate some local bottlenecks. However, it falls far short of what is needed to properly deal with this issue nationally;

6.      Finally, we draw attention that the claimed shortage of engineers in the country might not be a matter of purely quantitative supply, rather the spatial concentration of engineering schools and labor force play a rather important role in this debate.

Labour productivity vs Demographics

A very interesting article on Labour productivity vs demographics comparing Japan, USA and  Euro area ( via Bernardo L Queiroz).  It is based on a study by Nathan Sheets and Robert Sockin (I wish I had access to it!)

The NYT has also published a few words on this topic suggesting that "demographics are an important reason that the American economy has slowed but only one part of a much bigger story".

[Click on the image to enlarge it]

(Image Credit: FT Alphaville)

Global Labor Force

The McKinsey Global Institute has published a comprehensive report on global labor market and labor force supply. It includes a forecast of labor force supply and demand through 2030 and tackles several issues such as labor productivity,  population aging and educational attainment. (ht Fabiano Pompermayer)

No blue skies for Brazil.

[Click on the image to enlarge it]

[Source: McKinsey Global Institute]

Related Links:

• You may listen to a 8-minute summary of the report here.
  
• A brief paper we have published this year analysing labor force perspectives in Brazil [in Portuguese only]
  
• Interactive chart showing the distribution of different 'analytical talents' among industry groups in the US - Talent Gap by McKinsey 

Labor Force supply (stocks vs. flows)

A short and interesting article by Bryan Caplan on The Myth of the Education Plateau (via MR)

Figure source: Digest of Education Statistics 2010

China's Demographic Future (Part 2)

[Image credit: Chinese American Aging Issues]

And here is an excellent paper to understand China's demographic future: "The Future of a Demographic Overachiever: Long-Term Implications of the Demographic Transition in China" published at PDR by Wang Feng. The paper also dicusses the role of the Chinese State in demographic transition. Prof Feng has also presented the paper at Stanford (the audio is available). If you are having difficulties access the paper, try this link.

I have selected a few sentences:

Mortality

• "In the two decades after 1950, the crude death rate of the Chinese population was reduced by nearly 60 percent, from 18 per thousand in 1950 to 7.6 in 1970."

Life Expectancy 

• [in 50 years/ 1950-2000] China accomplished what it took these other countries [more developed european countries and US] a century to achieve, an increase in life expectancy from the 40s to over 70 years.

Fertility

• "In contrast to western european countries, where it took 75 years or longer to complete a fertility transitionfrom a TFR of around 5 to the replacement level, in China a similar decline took only about two decades."

Demographic Transition

• "In roughly half a century, China completed its transition from a low rate of natural increase due to high mortality and high fertility to a low rate of natural increase as a result of low mortality and low fertility."

Family

• "Moreover, the large number of families with only one child, often against the will of the parents, presents serious economic and social risks for Chinese families and for society as a whole."

Labor Force and Aging

• "China’s economic boom has relied on another crucial factor, namely a young and productive labor force. This large labor force, a non-repeatable historical product of the rapid demographic transition, was present fortuitously as the Chinese economy was about to take off."

• "China’s rapidly shrinking young labor force, a result of very low fertility for nearly two decades, will soon end the era of abundant supply of inexpensive labor that enabled China to become the world’s largest manufacturing center in the last two decades."

My take: China is perhaps one of the few countries that have completed its fertility transition without completing its urban transition. It means that China still has large amount of rural-urban migration potential, which could keep an abundant supply of inexpensive labor for many decades. Perhaps this potential is being underestimated. 

Related posts:

• Demographic factors of China's economic growth
• Overestimated China
• Labor Force and Economic Growth
• Huge Chinese internal migration