Interregional migration, self-selection and the returns to education in Brazil

Abstract

During the last decade Brazil has seen an astonishing reversal in the original north-east-to-south-east direction of migration. Within a framework of human capital and self-selection theory we try to identify the individual characteristics and motivations linked to the migration pattern. The overall results of this procedure suggest that there is a key difference between NE ${\Rightarrow }$ SE movers and SE ${\Rightarrow }$ NE movers. (1) SE ${\Rightarrow }$ NE movers were adverse self-selected in terms of observable education characteristics. (2) No self-selection could be observed among migrants in the NE ${\Rightarrow }$ SE direction. In general the North-East seems less attractive to highly skilled people. (3) Labor market segmentation with respect to sector occupation is likely. (4) There are clear differences in income determinants between movers and non movers. The majority of migrants except for migrants with higher education cannot expect to realize a return to education comparable to the average in the region of departure or destination. However, in the context of the Borjas selection model the returns to education analysis would predict a different pattern of migrant selectivity than the one observed in Brazil. Apart from soft characteristics connected to the regions we believe, that the large share of the non formal labor market is likely to indicate a surplus labor leading to a migration pattern different than expected from selection theory.