How Important is Economic Geography for Rural Non-Agricultural Employment? Lessons from Brazil

Abstract

By paying particular attention to the local economic context, this paper analyzes rural non-agricultural employment and earnings in non-agricultural jobs. The empirical analysis is based on the Brazilian Demographic Census, allowing for disaggregated controls for the local economy. Education stands out as one of the key factor for shaping employment outcome and earnings potential. Failure to control for locational effects can lead to biased estimation of the importance of individual and household-specific characteristics. The empirical results show that local market size and distance to population centers have a significant impact on both non-agricultural employment prospects and earnings. The impact, however, is quantitatively larger for employment.