1971 and underwent major revision between 1990 and 1992. This revision has made it difficult to obtain full compatibility of data between the PNAD before and after 1992; and since we do compare data across decades, this is important to keep in mind. The survey contains extensive information on personal characteristics, including information on income, labor force participation, educational attainment, and school attendance. Ferreira, Lanjouw, and Neri (1999) discuss shortfalls of the PNAD data and find that the PNAD underestimates incomes, and most seriously so in rural areas. The PNAD also does not allow us to analyze intra-state migration decisions, and its relatively small sample size limits, in some cases, the ability to analyze determinants of migration. The income data are adjusted by the local cost of living in accordance with the estimations of Ferreira, Lanjouw, and Neri.<sup>1</sup>

# 2.1 Major Migration Routes **within Brazil**

The Northeast region of Brazil includes nine of Brazil's 23 states: Alagoas, Bahia, Ceara, Maranhao, Pernambuco, Paraiba, Piauf, Rio Grande do Norte and Sergipe. It covers about 1.5 million square kilometers, over 18 percent of Brazil's total area. In 1998, total population of the Northeast was 47.7 million or about 28 percent of Brazil's total population. In 1998, Northeast GDP accounted for about 13 .percent of Brazil's GDP and per-capita GDP in Northeast was only 46 percent of the average GDP in Brazil. In 1999, the poverty rate, measured by per-capita income and the indigent poverty line, in the Northeast was about 44 percent compared to 23 percent elsewhere and still disproportionately rural (see Fiess and Verner 2001). In contrast, the four states in the Southeast (Rio de Janeiro, Sao Paulo, Mato Grosso, Espirito Santos) which occupy only 11 percent of land area, accounted for 43 percent of total population and around 60 percent of Brazilian GDP. Finally, the poverty rate in the state of Sao Paulo is 9 percent, hence less than a fifth of the poverty rate in the Northeast.

The disparity between the Northeast and the Center-South of Brazil goes back centuries. In the late 1800 the Northeast economy was heavily dependent on sugar but started to lose ground to the Center-South, with the increased demand for coffee. Several factors, including recurrent droughts, contributed to a rapidly growing socioeconomic gap between the two regions. The relative decline of the Northeast ceased only in the 1960s when the federal Government initiated broad-based measures to support development of the region. These measures helped stabilize the Northeast economy and modernize the industrial sector. The gap in per-capita incomes between the Northeast and the rest of Brazil worsened in the 1970s and recovered in the 1980s. A deeper analysis reveals that l A note of caution is in order. Since the PNAD is not stratified for the purpose of migration, an expansion from sample values to total population figures might not be representative. The PNAD may be incorrectly estimating migration. Comparing our figures with the Census data, we find that our methodology yields higher migration estimates than the Census. The higher estimates of the PNAD are at least partly due to a conceptual difference in the two survey instruments; the Census classifies a person who has lived 5 years ago in a different state as a migrant. For example, a person who lived in 1991 in Piaui moved in 1993 to Pernambuco and back then in 1995 back to Piaui will not be classified as a migrant. As we consider annual migration data, our methodology captures migration at a higher frequency.

3