THE DETERMINANTS OF AGGLOMERATION IN BRAZIL: INPUT-OUTPUT, LABOR AND KNOWLEDGE EXTERNALITIES BY

This research investigates industry agglomeration and coagglomeration patterns in Brazil, and assesses their association with the Marshallian forces that are commonly viewed as sources of agglomeration economies, namely the input-output and labor pooling externalities. Knowledge externalities, the third classic source of Marshallian agglomeration economies, are partially captured through labor-embodied knowledge usage. Industry-specific agglomeration and the coagglomeration of pairs of industries are measured with the use of Ellison and Glaeser (1997), and Moran’s indices. Direct and indirect input-output linkages are described and measured with the use of direct shares and dual scaling techniques. The ONET database, which contains several skill measures for US occupations, is matched with Brazilian occupations and factor analysis is used to produce a set of ONET skill and knowledge groups. These skills groups are intended to describe the labor profile of industries and regions and constitute the basis for measures of labor and labor-embodied knowledge externalities for pairs of industries. The measures of input-output linkages and labor-use similarity are related to the observed agglomeration and coagglomeratio