TD 0176 - Regional Wage Differences and Segmentation in Brazil`s Urban Labor Markets

William D. Savedoff / Rio de Janeiro, outubro de 1989

This paper investigates whether the workforce in Brazil is geographically segmented by analyzing variation in workers` earnings. It finds that standard market explanations for regional wage disparities, such as variations in the cost of living or workforce quality, can explain only a part of the disparities. The paper concludes that geographical obstacles to factor flows are not significant in Brazil. Rather, the persistence of regional wage differentials, in spite of the increasing integration of the Brazilian economy, can be largely attibuted to regional variation in the composition of labor demand.

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