Migration, Specialization, and Trade: Evidence from Brazil’s March to the West

Abstract

We study how migration shapes aggregate and regional comparative advantage, exploiting a large migration of farmers to Brazil’s West between 1950 and 2010. Migration allowed workers to sort according to their own comparative advantage, reallocating knowledge and raw labor to high-productivity regions. In a quantitative model, we find that migration cost reductions reshaped Brazil’s comparative advantage and contributed to its rise as a leading commodity exporter—accounting for 25% of the observed changes in specialization. Road expansions were key drivers of migration. Migration opportunities, moreover, account for a substantial share of the gains from trade.