Poverty, population growth and agglomeration effects in all Brazil cities

Abstract

PurposeThis paper aims to test three hypotheses in city growth literature documenting the poverty reduction observed in Brazil and exploring a rich spatial dataset for 5,564 Brazilian cities observed between 1991 and 2010. The large sample and the author's improved econometric methods allows one to better understand and measure how important income growth is for poverty reduction, the patterns of agglomeration and population growth in all Brazilian cities.Design/methodology/approachThe author identifies literature gaps and use a sizeable spatial dataset for 5,564 Brazilian cities observed in 1991, 2000 and 2010 applying instrumental variables methods. The bias-corrected accelerated bootstrap percentile interval supports the author's point estimates.FindingsThis manuscript finds that Brazilian data for cities does not support Gibrat's law, raising the scope for urban planning and associated policies. Second, economic growth on a sustainable basis is still a vital source of poverty reduction (The author estimates the poverty elasticity at four percentage points). Lastly, agglomeration effects positively affect the city's productivity, while negative externalities underlie the city's development patterns.Originality/valueData for cities in Brazil possess unique characteristics such as spatial autocorrelation and endogeneity. Applying proper methods to find more reliable answers to the above three questions is a desirable procedure that must be encouraged. As the author points out in the manuscript, dealing with endogenous regressors in regional economics is still a developing matter that regional scientists could more generally apply to many regional issues.