Agglomeration economies and college graduates job matching in brazilian labor market

Abstract

The aim of the paper was to analyze the relationship between agglomeration and college graduate job matching in Brazil. The research contributes by addressing the causal relationship between the labor market size and the matching of qualifications, considering different agglomerations in a large and heterogeneous geographical area. A panel data of formal college graduated workers in productive age in the period from 2006 to 2014 was used to investigate the influence of sorting and unobserved regional attributes on matching into more urbanized areas. Results showed that denser markets leverage better worker-job pairs. In addition, results on individual and agglomeration fixed effects showed that the influence of urban density on matching is inflated by the sorting of skills and regional attributes. Analogously, the urban wage premium was not driven by better matching in more urbanized environments. Similarly, the contribution of matching to productivity remains stable regardless of the size of the labor market.