Cross‐industry interlinkages in employment growth: Evidence from Brazil

Daniel R. Carvalho and Jean N. Lee

Review of Development Economics, 2022, vol. 26, issue 4, 2021-2039

Abstract: Using establishment‐level data from Brazil, we estimate the extent to which firm‐ and industry‐level employment and entry decisions respond to changes in the employment decisions of geographically proximate firms and industries. We instrument for employment changes by following Bartik (1991) and Blanchard and Katz (1992). Our analysis suggests the existence of economically and statistically significant effects of municipality‐level shocks in other industries on the employment and entry decisions of firms and industries in the same municipality. Spillovers are heterogeneous across municipalities and vary based on municipality income, distance from regional economic centers, and transport costs.

Date: 2022
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