Estimation of the elasticity of substitution between skilled and unskilled men in agglomerations between 1980 and 2000 in Brazil and the simulation of the impact of migration on the skill wage gap

EnglishWe use a production function approach to determine the impact on the wage skill premium of increased labor supply of different skills levels. In particular, we use data from the Brazilian population censuses for 1980 to 2000, for which there is consistent data on cities, to estimate the elasticity of substitution between high and low skill workers. We address the endogeneity of labor supply in urban areas by constructing an instrumental variable using the rural-urban migration response to exogenous shocks, such as rainfall shocks and changes in transport costs in rural areas. We find an elasticity of substitution between high and low skill workers of 0.56, so that high and low skill workers are gross complements and not gross substitutes as has been found previously in the international migration literature. Our simulations show that migration between 1991 and 2000 had only a small impact on the wage skill gap, specifically, a 1.1% decrease in the wage gap between high and low skill workers in Brazil. This explains only 5% of the changes in relative wages between high and low skill Our simulations show that migration between 1991 and 2000 had only a small impact on the wage skill gap, specifically, a 1.1% decrease in the wage gap between high and low skill workers in Brazil. This explains only 5% of the changes in relative wages between high and low skill workers seen in the data during this time period. Although this impact is small, it is 2.5 times larger than what we would have found using the elasticity of substitution between high and low skill workers of the international migration literature portuguesNeste estudo estimamos parâmetros de uma funcao de producao para determinar o impacto de alteracoes da oferta laboral nas diferencas salariais entre trabalhadores qualificados e nao qualificados. Nomeadamente, utilizamos dados dos Censos populacionais brasileiros entres 1980 e 2000,, para estimar a elasticidade de substituicao entre trabalhadores qualificados e nao qualificados. Resolvemos o problemas da endogeneidade da oferta laboral nas cidades construindo uma variavel instrumental utilizando o impacto de choques exogenos nas zonas rurais, como precipitacao e reducao nos custos de transporte, nas migracoes ruraisurbanas. Ao contrario do que foi encontrado anteriormente em trabalhos sobre migracoes internacionais encontramos uma elasticidade de substituicao entre trabalhadores qualificados e nao qualificados de 0.56, que indica que os trabalhadores com diferentes niveis de qualificacao foram complementares e nao substitutos. As nossas simulacoes mostram que a migracoes rurais urbanas entre 1991 e 2000 no Brasil reduziram as diferencas salariais entre trabalhadores qualificados e nao qualificados em apenas 1.1%. Isto representa apenas 5% da reducao do diferencial salarial entre trabalhadores qualificados e nao qualificados entre 1991 e 2000. Embora o impacto seja pequeno e 2.5 vezes maior do valor que obteriamos se tivessemos utilizado estimativas da elasticidade de substituicao entre trabalhadores qualificados e nao qualificados da literatura das migracoes internacionais