Spatial distribution of agglomeration effects on the returns to education in Brazil between 1995 and 2008

Abstract

The objective of this paper is to analyze the spatial distribution of the agglomeration effects on wage differentials, from the returns to education in Brazil. To find the agglomeration effects on the returns to education in 24 metropolitan areas in Brazil, a wage equation was estimated with the control of individual fixed effects and metropolitan areas effects, using a panel of micro data (Rais-Migra) of formal workers. The results show that there is agglomeration gain of the return to education in Brazil. These gains are more favorable in the North and Northeast regions of Brazil. The metropolitan areas of the Center-South tend to generate higher earnings from individual skills of workers or from unobservable factors in the wage equation.