The Developing Economies 49, no.

2 (June 2011): 14870

MIGRATION AND ECONOMIC GROWTH IN BRAZIL:

EMPIRICAL APPLICATIONS BASED ON
THE SOLOW-SWAN MODEL
Andr Braz GOLGHER,1 Lzia DE FIGUEIREDO,1 and
Roberto SANTOLIN2
1

Centro de Desenvolvimento e Planejamento Regional, Universidade Federal de Minas Gerais

(Cedeplar-UFMG), Brazil; and 2Instituto Trs Rios, Universidade Federal Rural do Rio de
Janeiro (ITR-UFRRJ), Trs Rios, Brazil

First version received June 2009; final version accepted November 2010
The paper addresses the question of whether migration plays a role in the determination
of the per capita incomes in sub-regions of Brazil. In order to discuss this relationship,
we slightly modified the Solow-Swan model with migration to better resemble the
Brazilian context. Based on this model, we determined theoretically five different
possibilities for the spatial dynamics regarding net migration, human capital differentials between migrants and nonmigrants, and capital stock per effective worker. We
applied this framework to census data and the microregions in Brazil were empirically
classified in one or other of these possibilities with the multivariate technique of cluster
analysis. Finally, we used econometric models with instrumental variables applied to
panel data and observed a tendency of increase in the variability of per capita income
due to migration.
Keywords: Migration; Economic growth; Brazil; Solow-Swan model
JEL classification: O15, R23

I.

INTRODUCTION

ifferences in per capita income among states in Brazil were quite large in
the middle of last century, but there has been an important process of
convergence: not only did the poorest states grow faster than the richest
ones (beta convergence), but also there was a decrease in the standard deviation of
per capita income (sigma convergence). For instance, in 1950, the state of So
Paulo had a per capita income ten times greater than the state of Piau. In 1985, this
number had decreased to seven (Ferreira 1996). The decrease in the dispersion of
per capita income was also observed for other geographical subdivisions, such as
microregions (Souza 2007) and municipalities (Coelho 2006).
One aspect that may promote a convergence in per capita income is migration.
For instance, low-income regions would present a tendency to lose population,
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while high-income ones would present positive net migration. This process would
promote an equalization of capitallabor ratios and salaries (Evans 1990; Graves
and Mueser 1993; Harrigan and McGregor 1993; Schachter and Althaus 1993).
The Solow-Swan model with migration addresses the relation between migration and economic growth (Barro and Sala-i-Martin 1995). When migration is
included in the Solow model, we must consider two possible effects on per capita
income. A positive migration rate, ceteris paribus, represents more people among
whom capital needs to be spread, which decreases capital per worker and therefore
income per worker, as exemplified above. However, on the other hand, if migrants
have higher levels of capital than residents, ceteris paribus, the capitallabor ratio
will increase and so will per capita income.
In this framework, if migrants do not carry more capital than residents and if
they move into richer areas, migration should speed the (beta) convergence
process, which, in the absence of any shock, would decrease the regional dispersion of income. On the other hand, if migrants have more capital than residents
(Borjas 1987), as is normally observed in Brazil (Golgher 2006), migration can
promote an increase in per capita income dispersion.
In this paper, we intend to discuss whether migration does play a significant role
in the determination of sub-regions per capita income. In order to do so, we applied
a different methodology and framework than the works that have studied this subject
regarding the Brazilian reality, which are presented in the next section. With this
objective, we divided the paper into seven sections, including this introduction. In
the next section, we present a literature review concerning the relationship of
migration and income. In Section III, we slightly modified the Solow-Swan model
with migration (Barro and Sala-i-Martin 1995), so as to better resemble the Brazilian
context. By doing so, we obtained five different possibilities for regional dynamics
regarding net migration rate, human capital levels and population growth. The fourth
section presents some descriptive data for all microregions in Brazil that are related
to the building blocks used in the theoretical model. Then, in Section V, we discuss
empirically some variables that are specifically proposed in this model. Based on
this last analysis, in the same section, we empirically classify the Brazilian microregions into one of the five theoretical possibilities of dynamic profiles. After this, in
Section VI, we apply some econometric models with instrumental variables to panel
data pursuing a general perspective concerning the influence of migration on per
capita income growth. The final section concludes the paper.
II.

LITERATURE REVIEW

In this section we present some studies that discussed a similar subject as the one
proposed here: firstly, some that used a similar theoretical framework, and then
some others that used Brazilian data.
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the developing economies

Barro and Sala-i-Martin (1995), with a similar theoretical framework as the

one used here, tested empirically the relationship between migration and income
growth rate for the states of the United States (18801990), for Japanese prefectures (195590), and for regions in Europe (195060 and 198090). They did
not find any significant relationship when using nonlinear least squares models to
estimate panels. However, when they used ordinary least squares (OLS), a negative net migration rate had a positive influence on growth rate of per capita
income in the first two groups of analyses. These results suggest that the outflow
of migrants had a positive impact on poor areas, although the magnitudes were
only marginal. The small impact of migration in those areas was also due
to the lower sensitivity of migration to income differentials in the United
States.
Specifically regarding Brazilian data, since internal migration was an important feature of the population dynamics in Brazil in the second half of last
century (Brito, Garcia, and de Souza 2004), it might have contributed to the
abovementioned convergence process in the country. This is even more relevant
since, when sigma convergence declined (after the 1980s), net migration rates
also declined.
It does not seem, however, regarding previous literature about the topic in
Brazil, that migration was a decisive component of the Brazilian interregional
per capita income dynamics. For instance, Canado (1999) did not find a significant effect of migration on growth rates of per capita income in the period
196091, and neither did de Menezes and Ferreira, Jr. (2003) between the years
of 1992 and 1999. De Figueiredo and Garcia (2007) found a nonsignificant
impact of migration on per capita income. However, these authors did find a
positive influence of net migration rate on total income growth rate between
1960 and 1990. Lima (2003) used a different empirical strategy concerning this
last study and observed a positive effect of net migration on per capita income
growth rate.
Moreover, Ferreira (1996) did note an influence of migration on the velocity of
per capita income convergence for states in Brazil, but only for the 1970s. Santos
and Ferreira (2007) showed in their simulations that all states had a higher income
due to migration, and that income dispersion among the states had diminished in
2003.
Therefore, there is some evidence that migration may have a relevant impact on
regional per capita income distribution in Brazil. However, the evidence is somewhat conflicting, and further research with different frameworks should be
pursued. In this vein, we intend to discuss the question of whether migration does
play a significant role in the determination of sub-regions per capita income using
a framework that is based on the Solow-Swan model with migration, which is
discussed in the next section.
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III.

151

THEORETICAL MODEL

The Solow-Swan model with migration addresses the relation between migration
and economic growth (Barro and Sala-i-Martin 1995). These relationships can be
exemplified in the following equation, which describes the growth rate of capital
per effective worker ( k ):

k = sf ( k ) k ( n + x + ) (i, e, k , i , e ) ,

(1)

where

(i, e, k , i , e ) m i i + e e = i e i i + e e = i 1 i e 1 e .
k
k
k
k
k

k
The first part of the equation, sf ( k ) k , represents the increase in capital due to
investments and is a function of the value of savings out of the average product of
capital, s stands for the saving rate, and k is capital per effective unit of labor. The
effective depreciation rate for capital without migration, (n + x + d), is a function
of population growth rate due to fertility net of mortality (n) and of the technological growth rate (x), that represents the growth rate of effective labor, and also
of the capital stock depreciation rate (d).
The impact of migration on the effective depreciation rate of capital is
(i, e, k , i , e ) . This last term can be thought of as the depreciation (or appreciation) caused by migration, which was slightly modified in order to better resemble
the Brazilian reality. It is a function of immigration (i) and emigration (e) rates. Net
migration rate (m) is equal to the first minus the second.
Immigrants bring and emigrants carry away with them a quantity of capital. It is
assumed that migrants carry little physical capital, as proposed by Barro and
Sala-i-Martin (1995), but do carry human capital. However, migrants can sell
physical capital at their origin and buy similar amounts at their destination. Hence,
this would promote mobility also for physical capital. Human capital levels are
positively correlated to individual income levels, and therefore also to capital in
general. Although positively correlated, it can be expected that human capital only
poorly resembles total capital. However, when dealing with ratios, especially only
with their magnitude, if they are over or under one, the proxy seems to be much
more accurate. Thus, we assume that human capital ratios between migrants and
nonmigrants can be used as a proxy for total capital ratios for these same groups.
Henceforth, we use human capital ratios, more specifically schooling levels, as a
proxy for total capital ratios.
The mean values for immigrants and emigrants for capital stock per effective
migrant worker in a specific region in the equation above are given by ki(t) and
ke(t), respectively. Due to turnover of migrants, remigration, return migration and
other features, human capital levels for both groups assume similar values in
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TABLE 1
Possibilities for the Dynamics of Regions

Net
Migration

Values of Other
Variables

What Would Happen?

m>0

1 k > 0
and x(.) > 0
1 k < 0 and
x(.) < 0, and
(x + n + d + x(.)) > 0
1 k < 0 and
x(.) < 0, and
(x + n + d + x(.)) < 0

Group 1: Migration as depreciation.

Growth of population due to migration and steady state.
Group 2: Migration as investment.
Growth of population due to migration and steady state
might exist.
Group 3: Migration as investment.
Growth of population due to migration and black hole
condition.

m<0

1 k > 0
and x(.) < 0
1 k < 0
and x(.) > 0

Group 4: Migration as investment.

Decrease of population due to migration and steady state.
Group 5: Migration as depreciation.
Decrease of population due to migration and possibly a
white dwarf condition.

Note: x is technological growth rate, n is population growth rate, d is depreciation rate,

and k are the capital stock per effective migrant and nonmigrant worker, respectively, and

m, k , m 1 .

Brazil, as shown in Table 2. Besides that, for microregions, the coefficient of

correlation for these variables is 0.90. Hence, we made the assumption that k(t) =
ki(t) = ke(t), that is, we can represent human capital levels of immigrants and
emigrants by a unique measure for migrants as a group.

By doing so, we obtained the equation ( m, k , ) m 1 , where m is net

k
migration rate, k is capital per effective nonmigrant worker, and is capital per
effective migrant worker. This term represents the impact of migration on capital
per effective worker, which may be negative, neutral or positive depending on
some features that are synthesized below and also in Table 1.
Notice that if k = 1 , namely, if nonmigrants and migrants have similar values
for human capital, the impact of migration is zero.
Observe that the term x(.) was included in the model as devaluation of capital.
Hence, if the sign is negative, the impact of migration on capital stock is positive.
A negative sign for this term can be obtained if: (1) m < 0 and k < 1 , the amount
of capital of nonmigrants is greater than for migrants; or (2) m > 0 and k > 1. In
both cases, the capital stock is increasing due to migration: a region is losing its
less qualified individuals in (1) or it is absorbing highly qualified workers in (2).
Given that in Brazil, migrants are mostly positively selected, that is, they have
greater levels of human capital than nonmigrants (Golgher 2006), this second
situation is more common. On the other hand, a positive sign for x(.), which
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represents a negative impact of migration, can be obtained if m < 0 and k > 1 ,

that is, a region is losing its most qualified individuals; or m > 0 and k < 1 , which
means that a region is absorbing non-qualified workers.
Depending on the magnitude of the terms in equation (1), we expect different
regional dynamics for the interaction of net migration, capital stock and population
growth. Here we describe the possibilities in Table 1.
Following the Solow-Swan model, and as proposed by the human capital model
of migration (Stillwell and Congdon 1991), normally flows of migrants are mainly
from low-income areas to high-income ones. Therefore, it is expected that net
migration is an increasing function of regional wages, and thus of local capital:
m
> 0.
k
Group 1 has m(.) > 0 and, hence, attracts migrants from other localities. Thus,
the levels of migrants capital are expected to be independent of those of the
nonmigrants, as they come from elsewhere. Besides that, group 1 has 1 k > 0
and hence, necessarily, x(.) > 0. That is, migration functions as depreciation of
capital and also as m > 0, the region presents population growth due to migration.
All this information is shown in Table 1. Moreover, we include in this table the
existence of a steady state, which we explain as follows.

Taking the partial derivative of ( m, k , ) m ( k ) 1 , we obtain:

k
2
(.) m

=
(1 k ) + m (k )( k ) . Therefore, for this group of microregions:
k
k
2
m
(.)
> 0, 1 k > 0, and m ( k ) > 0, as ( k ) > 0, necessarily
> 0. Notice

k
k
that x(.) > 0, and hence migration causes a depreciation of capital, and given that
(.)
> 0 , a steady state with k = 0 is always attainable.
k
As is observed for group 2, for a region with m(.) > 0, if migrants have relatively
high levels of human capital so that 1 k < 0, this would imply x(.) < 0. Here
migration can be seen as an investment and we have growth of population due to
(.)
migration. In this case,
can be positive or negative: if it is positive a steady
k
state exists; if it is negative and x + n + + ( k ) > 0, the steady state might exist or
not.
(.)
< 0, and x + n + + ( k ) < 0.
For group 3, m(.) > 0, 1 k < 0, x(.) < 0,
k
This means that: migration is an investment; population grows because
of migration; x(.) is a negative decreasing function; and the effect of migration as investment is greater in modulus than the depreciation due to the other
variables. In regions with these characteristics, a virtuous circle of capital
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increase would exist due to investments and also as a consequence of

migration, and a steady state cannot be attainable. These are the black hole
conditions.
For regions that present negative net migration, m(.) < 0, the area loses part of
its own population and the coefficient k can be treated as a constant, although
it can be less or more than one, depending on the selectivity of migration. Hence,
(.) m
=
the partial derivative of x (.) is:
(1 k ).
k
k
If migrants are negative selected, as in group 4, 1 k > 0, then x(.) < 0, and
(.)
> 0, and x (.) is an increasing function
migration is an investment. Moreover,
k
of k , and a steady state will exist.
If the migrants are positive selected, as in group 5, 1 k < 0, as x(.) > 0,
(.)
< 0, and the steady state may
migration has a depreciation effect. Moreover
k
exist or not. In regions where incomes are very low, most of the population may not
be able to pay the costs of migration and the possibility to migrate will not be a
feasible one (Golgher and Siviero 2009). Therefore, part of the original population
will be trapped in poverty in a steady state. However, if depreciation due to
migration is a slightly decreasing function, then a steady state might not occur
because x(.) can continue to be large enough to prevent it. In this situation the
population would vanish. Hence, as capital diminishes due to migration, the region
can enter a vicious circle regarding the dynamics of capital formation and depletion. These are the white dwarf conditions, and the population of the locality
might diminish, being particularly trapped in low-income areas, or may even
disappear. Glaeser, Sheinkman and Shleifer (1995) discussed this possibility in a
study for cities in the United States.
In the next section, we present some descriptive data which are related to the
theoretical possibilities of dynamic behavior of migration and capital stock per
effective worker discussed here.
IV.

DESCRIPTIVE DATA

This section presents some descriptive data about Brazil that are related to the
topics of the theoretical model. We used as the main database the Brazilian
Demographic Census of 2000 (FIBGE 2000). Ipeadata (http://www.
ipeadata.gov.br) published by Instituto de Pesquisa Econmica Aplicada (Institute
of Applied Economic Research, IPEA) was the source of the data that was not
related to education or migration. The data presented here is for the 558 microregions in Brazil, which were the same in 1991 and 2000. Table 2 presents data for
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TABLE 2
Descriptive Statistics of Some Variables
Variable
Population in 2000
Annual population growth between 1991 and
2000 (%)
Net migration in 19952000
Relative net migration in 19952000
Mean years of formal education for nonmigrants
workers
Mean years of formal education for immigrants
workers
Mean years of formal education for emigrants
workers

Minimum

Maximum

Mean

2,051
-2.0

12,790,268
12.6

304,432
1.4

-537,578
-3.09
2.44

145,105
7.07
9.01

0.00
-0.16
5.78

3.49

9.49

6.28

3.28

10.94

6.44

Sources: FIBGE (2000); Ipeadata (htt://http://www.ipeadata.gov.br).

population, net migration, and human capital levels for nonmigrants and migrants.
Population in the Brazilian microregions ranged from a little over 2000 to over 10
million, a very large range.
Table 2 shows that annual population growth between 1991 and 2000 varied
between -2.0% and 12.6%. Figure 1 shows the data for all microregions in Brazil.
Firstly, it can be seen that most microregions had a positive value. It can also be
observed that there was a large region of high population growth in the north of
Brazil, including nearly all the North Region and parts of the north of the CenterWest Region. The other areas of high population increase are much smaller, but
many are highly populated. These are mostly located in specific areas of the South
and Southeast Regions, especially near the coast, and also around the capital of
Brazil, Brazilia. Conversely, some areas had low or negative population growth,
such as the west of the South Region and the central-east and northeast of Brazil.
Table 2 shows data for migration. The Brazilian census has the information on
where the person lived five years before the census research and his or her current
place of residence. Individuals who declared different municipalities were considered migrants in the period of 19952000. Notice that the flows are between
Brazilian municipalities. Net migration, that is, the number of immigrants minus the
number of emigrants, M = I - E, ranged from less than -500,000 to over 140,000.
The table also shows the data for net migration rate (m). This variable was
obtained as follows:

m = M (5 P1997.5 ) = ( I E ) (5 P1997.5 ) ,
where P1997.5 is the linear interpolation of populations in 1996 and 2000 for the
middle of 1997.
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Fig. 1. Population Growth Rate between 1991 and 2000 for Microregions in Brazil

Source: Compiled by authors based on Ipeadata (htt://http://www.ipeadata.gov.br).

Note: Microregions number in parentheses.

Figure 2 shows the data for all microregions. Approximately, we can identify
three large areas of positive values for net migration rate: one in the very north of
Brazil; another in the north of the Center-West Region and in part of the east of the
North Region; and a third, including many areas of the South and Southeast
Regions and around Brazilia. The largest areas of negative net migration rate were:
the west of the South Region and part of central-east and northeast of Brazil.
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Fig. 2. Net Migration Rate between 1995 and 2000 for Microregions in Brazil

Source: Compiled by authors based on FIBGE (2000) and on Ipeadata (htt://http://

www.ipeadata.gov.br).
Note: Microregions number in parentheses.

Table 2 shows some data for schooling levels. Notice the similarity in human
capital levels for immigrants and emigrants, a little above the levels observed for
nonmigrants. Figure 3 shows the results for number of years of formal education
for nonmigrant workers in 2000. Data for immigrants and emigrants showed
similar maps, although with higher values, and are not shown. Roughly, Brazil
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Fig. 3. Formal Education of Nonmigrants Workers in 2000 for Microregions in Brazil

Source: Compiled by authors based on FIBGE (2000).

Note: Microregions number in parentheses.

could be divided in four areas: the center and south with higher values; the axis
between Manaus, capital of Amazonas state, and Boa Vista, capital of Roraima, in
the very north of Brazil, also with higher values; most areas of the north and
northeast of Brazil with low levels; and the capitals of the Northeast Region with
high education standards.
Given this overall profile of population growth, net migration and human capital
distribution, we empirically analyze in the next section the variables specifically
discussed in the theoretical model.
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TABLE 3
Distribution of Microregions According to Different Variables of the Theoretical Model for
Different Areas in Brazil
Area
Sign of the Variable
Brazil
Net Migration Rate
Negative
369
Positive
189
1 k
Negative
495
Positive
63

(.) m 1

k
Negative
168
Positive
390
Total devaluation of capital stock
Negative
29
Positive
529

North
Region

Northeast
Region

Southeast
Region

South
Region

Center-West
Region

37
27

163
25

69
91

70
24

30
22

54
10

172
16

131
29

93
1

45
7

19
45

29
159

78
82

23
71

19
33

8
56

4
184

9
151

5
89

3
49

Source: FIBGE (2000).

V.

EMPIRICAL ANALYSES OF THE THEORETICAL MODEL

This section discusses empirically some of the variables specifically proposed in

the theoretical model above. Notice that Table 1 classified the regions regarding the
dynamic properties of regional migration, per capita income and population
growth based on the following variables: net migration rate, m; 1 k ;

(.) m 1 ; and the total devaluation term (x + n + d + x(.)). Table 3 shows

k
the empirical results for these variables. We classified the microregions of Brazil
regarding the signs of these variables for each one of the macroregions in Brazil:
North, Northeast, Southeast, South, and Center-West.
Table 3 shows that most microregions in Brazil had negative values for net
migration rate, 369 against 189. Two regions, the Northeast and the South, had the
same general profile as the country as a whole, with a remarkable predominance of
microregions with negative values. In the North and Center-West Regions there
was a more slight predominance of negative values. Rather differently, most
microregions in the Southeast Region had positive net migration, indicating that
this last macroregion differed greatly in net migration rates from the others.
Figure 3 showed that there existed a great variability in human capital levels
among the microregions in Brazil. However, most microregions had higher levels
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of formal education for migrant workers than for the nonmigrant ones. That is,
migration was a positive selective process in most places. Schooling levels for
migrants were obtained as a weighted mean of the mean values for formal education for immigrants and emigrants. Hence, as also presented in Table 3, the term
1 k , was negative for most regions in Brazil: 495 against 63. All macroregions
had much larger numbers of negative values for this variable than positive ones,
indicating that this phenomenon was spatially widespread.
The values for x(.) are also shown in the Table 3 for Brazil and for each one of
the macroregions in the country. Note that the impact of migration on capital stock
is positive if the sign of this variable is negative and vice versa. Roughly, two thirds
of the microregions had a positive value for the variable in Brazil, which means
that migration was a depreciation of capital. All macroregions had a positive
predominance, although in the Southeast region it was small and in the Northeast
it was the greatest. The other macroregions had a similar profile, resembling the
country as a whole.
Finally, the table shows the data for the devaluation term (x + n + d + x(.)). We
used here the following values which were used in other studies in Brazil (Nakabashi and de Figueiredo 2008): x = 0.02 and d = 0.05. n is the populations natural
increase in the 19962000 period. It was estimated by the difference between
actual population increase and the direct and indirect increase due to migration.
Most microregions presented devaluation, as is shown by the positive sign of this
term. For most microregions with migration as devaluation, that is, with x(.) > 0,
all devaluation terms are positive, because nearly all microregions had positive
population growth due to fertility net of mortality. Conversely, very few microregions, 29 out of 558, had negative devaluation rate, that is, migration had such a
large positive impact that it was greater than the devaluation of the other terms.
Table 3 presents the empirical results separately for each one of the four terms
of the theoretical model. Table 1 discusses them conjointly theoretically and shows
five possibilities of migration/capital/population dynamics. We classified empirically the microregions in Brazil in one of these five possibilities with the use of the
multivariate technique of cluster analysis (Hair et al. 2005). Figure 4 shows the
distribution of microregions in Brazil in each one of these groups.
Group 1 had 42 microregions where net migration was positive and migration
was another factor of depreciation. Firstly, most state capitals, 16 out of 27, were
in this first group. Many microregions of the interior of So Paulo state, 18, were
also in this group. These last ones were located quite closely together, as shown on
the map.
Group 2 was the second largest with 119 microregions, all with positive net
migration and with migration as investment. Six capitals were in this group.
Besides that, many microregions (22) from the state of Minas Gerais, none in the
north of this state, and many from the state of So Paulo (27) were in this group.
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Fig. 4. Microregions in Brazil Classified Following the Description of Types Presented in Table 1

Source: Compiled by authors based on FIBGE (2000).

Note: Microregions number in parentheses.

It is easily noticed that this group clustered in some areas: in part of these two
mentioned states plus the south of Gois and the north of Rio de Janeiro; the north
of Mato Grosso and Tocantins; and the center of Rio Grande do Sul.
Group 3 with 28 microregions had positive net migration, migration as investment and negative values for devaluation as a whole, that is, the black hole
condition. The areas with these characteristics were distributed as follows: none
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are state capitals or have a large urban center; many are located on the coast of the
South or Southeast regions, highly attractive areas, including high levels of urban
and natural amenities; or in areas of high recent migration rates, such as north of
Mato Grosso or Amap state.
Twenty-one microregions were in group 4 with migration as investment and
negative net migration, including the two largest urban centers in Brazil, So Paulo
and Rio de Janeiro, mostly because they lost population to surrounding areas,
mostly low-income people.
Group 5 is by far the largest with 348 microregions, or 62% of the total, with
migration as depreciation and negative net migration, possibly with white dwarf
conditions. Most of these were located in the Northeast Region, the north of Minas
Gerais, the west of south Brazil or in part of the North Region.
Notice that most microregions were classified in groups 2 and 5, which indicated
a divergent dynamics for the interaction between migration, income and population
growth. Group 2 presents positive net migration and migration as investment and
group 5 shows a negative migration and migration as devaluation. Hence, it can be
inferred that there might be an overall positive correlation between migration and
regional per capita income, which promotes an increase in per capita income
variability due to migration. In order to discuss this point more precisely, we
applied different econometric models to the Brazilian data, as presented in the next
section.
VI.

ECONOMETRIC ANALYSES

The main purpose of the econometric analyses is to discuss empirically possible

impacts of migration on per capita income growth rate. It is motivating to compare
the Brazilian case with the experience of the developed countries, because of our
higher regional disparities. Our sample includes the 558 microregions in Brazil for
two periods of time, 198596 and 19962005.
The empirical model proposed in this paper is based on the theoretical model
discussed previously and also takes into account the empirical findings of the two
previous sections. The following equation represents the empirical model:

(ln yi,t ln y i,t )

= 0,i + ln yi ,t + (.)i ,t + X i ,t + Ri + t + i ,t .

In the dependent variable, (lnyi,t- lnyi,t-t)/t, yi is per capita income in microregion

i, and t is the number of years in the analyzed period, that here is nine years, the
time span of the two discussed periods.
In order to analyze the b-conditional convergence, we included in the model the
term lnyi,t-t. A negative sign for b indicates a conditional convergence for per capita
income, after controlling for regional differences represented by the state
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163

dummies, which were also included in the model. It should be emphasized that a
b-conditional convergence does not imply an absolute regional homogenization of
per capita income (Sala-i-Martin 1996).
The next term in the empirical model is x(.)i,t-t, which is the same as discussed
in the theoretical model. Net migration was estimated in two time intervals,
198691 and 19962000, and human capital was estimated in two years, 1991 and
2000.
A negative sign for the coefficient in the econometric analysis for this term
indicates that a place with high and positive value for x(.)i,t-t had a negative effect
on per capita income growth. Table 3 showed that for most microregions
1 < 0 and, hence, a high and positive value for x(.) is mostly obtained
i,t-t

with m < 0 and 1 < 0 . That is, a region is losing its most qualified individuals

k
to other regions in Brazil. A high and positive value for x(.)i,t-t can also be obtained

with m > 0 and 1 > 0. This means that the region absorbs low-qualified

k
individuals. In both cases, as is the objective of x(.)i,t-t, there are negative variations
on capital stock per effective worker.
The Xi is a matrix of control variables, which include human capital (h) and
population growth rate (n), as both effect regional levels of capital per effective
worker. Ri is a matrix with regional dummies for each one of the states in Brazil,
while t stands for time.
Given that the model includes time in its specification, the empirical analyses do
not explain temporal variations on national means. Moreover, as we used panel
data with random effects, the procedure allows the correlation between the
microregions error terms in different years. We did not include fixed effects,
although we did control for states fixed effects in the model, since if we had not
we would have severe multicollinearity problems.
We prepared instruments for net migration in order to minimize the relative
endogeneity that might occur between migration and economic growth. For
instance, it is expected that regions with higher growth rates will attract a skilled
labor force, this will tend to increase local productivity, and hence to promote more
intense economic growth, with the establishment of a virtuous circle. The contrary
is expected in places showing economic stagnation and the loss of qualified
individuals.
Therefore, while studying the effects of migration on economic growth, the use
of techniques to control endogeneity is highly recommended. Based on Moretti
(2004), we used age groups as instruments for net migration and schooling levels.
Due to the age profile of migrants, areas with positive net migration tend to have
a higher proportion of young adults. These areas also show a tendency to have
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the developing economies

higher levels of formal education.1 On the other hand, regions with negative net
migration and lower schooling levels normally have greater proportions of children
and elderly people.
Given that we did not have data before 1980 for migration and human capital, we
chose to use the identification hypotheses as instruments for the x(.) variable. We
used two types of instrument. The first one is the proportion of individuals in the
population with age between 15 and 29, hereafter called young adults. The second
instrument was the sum of the proportion of children, individuals with age between
0 and 14, and the proportion of elderly persons, those with age of 65 years or more.
Age distribution may have an impact on migration and economic growth. However,
some age groups might not impact both variables, and can be correlated with the
former, but not with the latter. Hence, we used these variables as instruments in
order to verify robustness of the x(.) coefficient in the models.
For the other variables, that is, ln yi,t-t, hki,t-t, and ni,t, following Arellano and
Bond (1991) and also Arellano and Bover (1995), we used as instruments lagged
values of each one of them, which were obtained with the following rules: (1) for
per capita income, values of 1980 and 1985, respectively, as instruments for 1986
and 1991; (2) for human capital, the same for 1980 and 1991 correspondingly for
1991 and 2000; and (3) for population growth rate, values for 198085 and
198596 in that order for 198596 and 19962000.
Table 4 shows our results and includes ten specifications for the model. In the
specifications in models (1), (2), and (3), we did not include x(.). Model (4)
includes this variable, but still does not include instruments, although it includes
regional dummies. Models (5) and (6) include instruments, as specified in the
table, but do not include regional dummies. The last two models show a complete specification, since they control for the endogeneity problem and also
include the regional dummies. We analyzed these eight models in order to
perform robustness tests. The models showed rather stable results and consistency between theory and the empirical analyses. The coefficients were usually
significant at 10%.
The coefficient for logarithm of initial per capita GNP was not significant only
when endogeneity problems were not attenuated with the use of instruments. When
using instruments, the coefficients were all negative and significant, with values
ranging between -0.20 and -0.12, suggesting a tendency of b-conditional convergence between microregions in Brazil in the period. These values were larger in
modulus than the ones obtained for Japan, USA, and Europe (Barro and Sala-iMartin 1995), and also higher than the ones usually obtained in the Brazilian
literature about regional convergence. Only de Menezes and Ferreira, Jr. (2003)
found similar results in a specification that included migration as an independent
1

The relationship between age and schooling levels is discussed in detail in Santolin (2010).

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No
Yes
Lagged
values

-0.14***
(0.022)
0.20***
(0.039)
1.56*
(0.87)

0.010
(0.020)
-0.10***
(0.035)

-0.005
(0.011)
0.090***
(0.023)
-5.87***
(0.28)

0.079***
(0.012)
0.24**
(0.098)

No
No
No

(2)

(1)

Yes
Yes
Lagged
values

-0.20***
(0.045)
0.19***
(0.049)
2.83*
(1.61)

-0.002
(0.026)
-0.16
(0.169)

(3)

Yes
No
No

-0.010
(0.011)
0.060***
(0.023)
-6.21***
(0.28)
-0.031***
(0.005)
0.067***
(0.012)
0.11
(0.136)

(4)
-0.13***
(0.020)
0.12***
(0.038)
-1.17
(0.78)
-0.066***
(0.015)
-0.003
(0.020)
0.079
(0.048)
0.1495
111.56
(0.000)
100.27
(0.000)
No
Yes
Lagged values;
Children and
elderly

(5)

(6)

Models

-0.133***
(0.025)
0.130*
(0.067)
-1.052
-1.802
-0.060*
(0.032)
-0.003
(0.020)
0.060
(0.105)
0.030
86.96
(0.000)
99.41
(0.000)
No
Yes
Lagged values;
young adults

Source: Own elaboration from FIBGE (1991, 2000); Ipeadata (htt://http://www.ipeadata.gov.br).

Note: Standard errors in parentheses.

Tests done to young adults and children and elderly.

***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively.

Shea partial R2
Test F of excluded instruments
(p-value)
Anderson-Rubin Wald test
(c2)(p-value)
Includes regional dummies?
With instruments?
What kind of instruments?

Constant

x(.)i,t-t

ni,t

hki,t-t

lnyi,t-t

Variables

TABLE 4

-0.12***
(0.029)
0.11***
(0.039)
-2.31**
(1.11)
-0.078***
(0.016)
-0.004
(0.021)
0.13
(0.136)
0.1450
70.23
(0.000)
97.75
(0.000)
Yes
Yes
Lagged values;
children and
elderly

(7)
-0.109***
(0.030)
0.089**
(0.039)
-2.801*
-1.566
-0.096***
(0.021)
-0.006
(0.018)
0.2970
(0.1523)
0.0648
62.11
(0.000)
106.40
(0.000)
Yes
Yes
Lagged values;
young adults

(8)

Econometric Models Based on the Solow-Swan Model Applied to Brazilian Data

-0.026**
(0.0144)

-0.061***
(0.012)

0.0528***
(0.010)
0.115
142.49
(0.000)
3.40
(0.065)
Yes
Yes
Young
adults

0.042
(0.154)
0.200
267.48
(0.000)
26.63
(0.000)
Yes
Yes
Children
and elderly

(10)

(9)

migration and economic growth in brazil

165

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variable. After controlling for endogeneity, we may infer that the speed of convergence among Brazilian microregions is much higher than already documented.
Regarding the Brazilian reality, due to the positive effects of per capita income on
migration flows, which promotes a divergence of local per capita income, as
explained below, the effects that favor convergence were correctly captured by the
coefficient of initial per capita income. Moreover, given that models with and
without the x(.) term had similar coefficients, we can infer that migration does not
effect directly the speed of convergence, but only per capita income, as the model
is of conditional convergence.
The human capital variable was always positive and significant and not very
sensitive when we included the regional dummies. Note that when instruments
were used, the coefficient was biased by the omission of the x (.) term as is
observed in the models (2) and (3), with much higher values, around 0.20. Including this term, the coefficients decreased to approximately 0.13, as in models (5) to
(8). This indicates, as expected by theory, that part of the human capital impact
occurs due to migration.
These results negative coefficient for per capita income in the beginning of the
period and positive coefficient for the human capital variable are in accordance
with the theoretical model and with the corresponding empirical literature. It
should be noticed that Souza (2007) also found these same results for microregions
of Brazil in the period 19702000.
The results for population growth rate were not robust. In some models, as in
models (2) and (3), the coefficients were positive, while in others, such as in
models (1), (4), and (6), they were negative.
Most importantly, when using different instruments, we observed negative and
similar correlations between x(.) and economic growth as in models (5) to (8). The
values ranged between -0.06 and -0.08, indicating the robustness of our results.
Most microregions in Brazil were classified in group 5 in the section that describes
the empirical analyses of the theoretical model. They present negative net migration and migrants with higher levels of formal education than nonmigrants. Since
the coefficients were negative, the econometric model showed that the capital
depletion observed for this group of microregions had a negative impact on per
capita income growth, indicating the possibility of a vicious circle or a white
dwarf condition. That is, regions that lost the most qualified individuals to other
regions experienced a negative impact on capital per effective worker and also on
per capita income growth.
Another 147 microregions in Brazil were classified as positive net migration and
migration as investment, 28 of them with black hole conditions, as presented in
Figure 4. For these regions there is an increase in the capital stock due to migration
and, following the econometric results, a more remarkable economic growth, with
the possibility of existence of a virtuous circle.
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Hence, we observed an overall centripetal influence of population movement on

per capita income growth in Brazil. To be exact, per capita income variability tends
to increase due to migration. The magnitude of internal migration flows in Brazil,
mostly driven towards regions with higher per capita income, and the positive
selectivity of migrants explains part of these findings.
Notice that in models (5) to (8), we used two different statistics in order to test
the robustness of the instruments used for the x(.) variable, which depend on the
correlations between age structure variables and net migration. The AndersonRubin Wald test (Staiger and Stock 1997) has a null hypothesis in our analyses that
demographic structures are not indicated to explain net migration. The results
rejected this hypothesis in all models. Moreover, the Shea partial R2 (Shea 1997)
showed that the variable young adults had a weaker relation to migration than the
variable children and elderly. We also show in Table 4, the last models (9) and
(10), which include only the variable x(.), regional dummies, and the variables for
children/elderly and young adults, respectively, as instruments. We observed that,
even without the lagged instruments, the coefficients for x(.) did not show a large
variability. All these results indicate that the instruments were robust and well
designed.
VII.

CONCLUSION

Until recently the main econometric results concerning the impact of migration on
regional distribution of per capita income in Brazil presented a conflicting outline.
This paper had its main objective to analyze this relationship with a different
perspective in order to clarify this association.
As discussed by Santos and Ferreira (2007), there was a concern that the
positive selection of migrants, that is, individuals with higher schooling levels
showed a higher propensity to migrate, would imply that the richer areas, which
were the preferential destiny of migrants, would benefit from migration, while
the contrary would happen with regions that had a negative net migration. Our
contribution in this paper was to reinforce this conclusion from a macro perspective using a theoretical strategy similar to Barro and Sala-i-Martin (1995).
Hence, our results were consistent with those obtained by Santos and Ferreira
(2007), and corroborated those of Lima (2003) and Resende (2005), who suggested that there existed agglomerative effects of migration, as discussed in
Krugman (1991).
Our theoretical and empirical results corroborated many aspects observed in
Brazil, which indicated that there would exist a general centripetal influence of
population movement, such as the large regional wage differentials among Brazilian regions, the magnitude of the internal migration flows, the positive selectivity
of migrants, and the preference of destinations with higher per capita income.
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The results that we obtained are quite remarkable, since they diverge from some
of the previous ones that discussed the Brazilian data (Canado 1999; de Menezes
and Ferreira, Jr. 2003; de Figueiredo and Garcia 2007). However, the differences
between these previous results and this work seem to derive from our econometric
treatment of the endogeneity problem, but may also be due to the choice of
microregions as the unit of analysis, which increased our number of observations.
We also emphasized that there were different dynamic pathways regarding
migration, capital stock and economic growth that are context-dependent. Hence,
although a general contribution of migration to income distribution could be
noticed, regional particularities also exist, as the consequences of migration, as we
discussed theoretically and empirically, are context-dependent and vary among
regions.
Our results imply that migration agglomerative effects in most cases were not
strong enough to counterbalance either congestion or the increase in the effective
depreciation rate. Therefore, migration might increase per capita income but a
new steady state is normally obtained. However, in some regions, a vicious circle
might occur with capital depletion due to migration and a decrease in relative per
capita income. This can be expected in a large number of microregions in Brazil.
On the other hand, in very few places a virtuous circle is possible, with migration
as investment and a relative increase in per capita income.

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