Regional imbalances and market potential in Brazil

Abstract

This paper estimates the effects of market potential on regional wage imbalances between Brazilian municipalities. Using data from the 1980, 1991 and 2000 Brazilian Census, which render 3,630 comparable municipality areas, we estimate the NEG's wage equation using a spatial panel data model accounting for endogeneity. Our results show new evidence of a strong relationship between market potential and wages, indicating that regional attributes, as well as individual, are correlated with wages and their regional disparities. © 2010 Regional Studies Association.