Seminario en economía aplicada Núm. 25: Migration, Specialization, and Trade: Evidence from the Brazilian March to the West

Resumen: We study how internal migration shapes aggregate and regional comparative advantage. Using Brazilian census data, we document that farmers emigrating from regions with high employment in a given crop are more likely to grow that crop and earn higher incomes than other farmers doing so. We also show that regional production of a crop, increases with immigration from regions employing many farmers in that crop, after controlling for total crop employment. We incorporate these facts into a quantitative, dynamic model of trade and migration in which a region's specialization is determined by natural advantage, labor availability, and the knowledge of the labor force. Applying our model to the large migration of agricultural workers to the west of Brazil in the second half of the 20th century, we find that the reallocation of workers reshaped Brazil's export profile, contributing to its rise as a leading commodity exporter, and that a substantial part of this change is due to the knowledge carried by migrants. Since the change in comparative advantage involved primarily the agricultural sector, aggregate gains from trade were little affected by migration.