Migration, Specialization and Trade: Evidence from the Brazilian March to the West

Abstract We study how the knowledge that migrants carry over space shapes specialization and trade. Using Brazilian census data, we first document that, upon migration, farmers originating in regions specialized in a crop are more likely to grow that same crop and earn higher incomes than other farmers doing so. Second, we show that the composition of workers in terms of their region of origin correlates with regional exports, after controlling for total sectoral employment. Informed by these facts, we develop and estimate a quantitative dynamic model of trade and migration in which a region's specialization is determined, in part, by the knowledge that migrants in that region carried with them. Applying our model to the large migration of agricultural workers to the west of Brazil since the 1980s, we find that the knowledge carried by migrants contributed substantially to Brazil's recent specialization in exporting commodities, such as soybean.