Migration, Specialization, and Trade: Evidence from Brazil’s March to the West; Sebastian Sotelo (University of Michigan)

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 comparative advantage. Incorporating these mechanisms into a quantitative model, we f ind that migration cost reductions reshaped Brazil’s comparative advantage and contributed 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.

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