Demographic change and economic development at the local level in Brazil

In this analysis, I estimate the impact of the changing relative size of the adult male population, classified by age and education groups, on the earnings of employed males living in 502 Brazilian local labor markets during four time periods between 1970 and 2000. The effects of shifts in the age distribution of the working age population have been studied in relation to the effect of the baby-boom generation on the earnings of different cohorts in the United States. However, the question has received little attention in the context of the countries in Asia and Latin America, which are now experiencing substantial shifts in their age-education distributions. Taking advantage of the huge variation across Brazilian local labor markets, the models in this research suggest that age-education groups are not perfect substitutes, so that own-cohort-education size depresses earnings, as expected by the theory. Compositional shifts are influential, attesting that this approach represents a fruitful way of studying this central problem in economic development, going beyond the effects normally analyzed by formal labor market equations.