Migration, Specialization, and Trade: Evidence from Brazil’s March to the West

• Agricultural Economics Workshop
• Departmental Seminar
• Development Workshop

Date and Location

Thursday, February 2, 2023, 10:30 AM - 12:00 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

We study how migration shapes aggregate and regional comparative advantage, exploiting a large migration of farmers to the West of Brazil between 1950 and 2010. Besides reallocating workers to regions where productivity was rising and land was abundant, we show that migration allows workers to sort according to their own com- parative advantage. Incorporating these mechanisms into a quantitative model, we find that migration cost reductions reshaped Brazil’s comparative advantage and con- tributed to its rise as a leading commodity exporter—accounting for 30 percent of observed changes in specialization. Migration opportunities, moreover, account for a substantial share of the gains from trade.