Effects of Imigration in Brazil
Effects of Imigration in Brazil
Effects of Imigration in Brazil
David Escamilla-Guerrero
Andrea Papadia
Ariell Zimran
For helpful comments, we thank William Collins, Martín Fernández Sánchez, David Jaeger, Aldo
Musacchio, Blanca Sanchez-Alonso, Sandra Sequeira, João Tampellini; seminar participants at
the University of Bonn, University of York, University of Newcastle, Wageningen University,
and Vanderbilt University; and conference participants at the 2021 Markets and Policy in History
Workshop, 2022 Economic History Society Conference, 2022 European Historical Economics
Society Conference, and the 2022 World Economic History Congress. Jared Katz and Víctor
Luna provided excellent research assistance. Renato Colistete kindly shared data with us.
Financial support was provided by Vanderbilt University and the University of St Andrews. The
views expressed herein are those of the authors and do not necessarily reflect the views of the
National Bureau of Economic Research.
NBER working papers are circulated for discussion and comment purposes. They have not been
peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies
official NBER publications.
© 2024 by David Escamilla-Guerrero, Andrea Papadia, and Ariell Zimran. All rights reserved.
Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission
provided that full credit, including © notice, is given to the source.
The Effects of Immigration in a Developing Country: Brazil in the Age of Mass Migration
David Escamilla-Guerrero, Andrea Papadia, and Ariell Zimran
NBER Working Paper No. 32083
January 2024
JEL No. F22,J61,N36,N56,O13,O15,Q15
ABSTRACT
The effects of immigration are reasonably well understood in developed countries, but they are
far more poorly understood in developing ones despite the importance of these countries as
immigrant destinations. We address this shortcoming by studying the effects of immigration to
Brazil during the Age of Mass Migration on its agricultural sector in 1920. This context benefits
from the widely recognized value of historical perspective in studies of the effects of
immigration. But unlike studies that focus on the United States to understand the effects of
migration from poor to rich countries, our context is informative of developing countries'
experience because Brazil in this period was unique among major migrant destinations as a low-
income country with a large agricultural sector and weak institutions. Instrumenting for a
municipality's immigrant share using the interaction of aggregate immigrant inflows and the
expansion of Brazil's railway network, we find that a greater immigrant share in a municipality
led to an increase in farm values. We show that the bulk of the effect of immigration can be
explained by more intense cultivation of land, which we attribute to temporary immigrants
exerting greater labor effort than natives. Finally, we find that it is unlikely that immigration's
effect on agriculture slowed Brazil's structural transformation.
Andrea Papadia
Department of Economics and Related Studies
University of York
Alcuin D Block, Campus West
York YO10 5DD
United Kingdom
andrea.papadia@york.ac.uk
What are the effects of immigration in a developing country? Despite the importance of developing countries
as migrant destinations (Ratha and Shaw 2007),1 hosting over 40 percent of world migrants (World Bank
2016, p. 11), the effects of immigration in these economies remain unclear. The literature on the economics of
migration focuses almost entirely on immigration to rich countries and on developing countries as immigrant
sources (Biavaschi et al. 2018; Böhme and Kups 2017; Hanson 2009; Hatton and Williamson 2002, 2005),
providing little guidance. Indeed, developing countries may attract different types of migrants or migrants
from different places of origin than more developed countries, which, together with substantial differences in
economic structure and institutions, may ultimately cause the effects of immigration to differ from those in
In this paper, we study the effects of European immigration to Brazil in the period 1855–1920. Our
main focus is on Brazil’s agricultural sector in 1920, motivated by the structure of Brazil’s economy and
the role of immigrants within this economy. Brazil at this time was an overwhelmingly agrarian economy
with an emerging industrial sector. Brazilian policy makers, motivated by labor demand in the expanding
coffee sector and the decline and eventual abolition of slavery in 1888, initially encouraged immigration from
Europe to provide labor for the agricultural sector,2 and even outside of official migration subsidy programs,
immigrants largely entered the agricultural sector. Given the prominence of the agricultural sector and its
importance in the immigrant experience in Brazil, we investigate whether migration did, in fact, support
the development of this sector, which we operationalize by focusing on the value of farms across Brazilian
to the country’s ongoing structural transformation, which enables us to address the long-standing debate
in development economics regarding the role of agricultural development in overall economic development
Our historical context is situated within the Age of Mass Migration—a period roughly 1840–1920 in which
over 50 million people migrated from Europe to the Americas (Hatton and Ward 2019; Hatton and Williamson
1998). The value to the economics of immigration from studying this period is broadly recognized,3 including
in studies of the effects of immigration (e.g., Abramitzky et al. 2023; Price, vom Lehn, and Wilson 2023;
1 It is estimated that the stock of migrants from developing countries in developing countries exceeds the stock of migrants
the widespread desire amongst Brazilian policymakers to “whiten” Brazil’s population through immigration and miscegenation
(da Costa 2000; Machado 2006; Slenes 2010).
3 See, for instance, Abramitzky and Boustan (2017), Abramitzky, Boustan, and Eriksson (2012), Collins and Zimran (2023),
1
Tabellini 2020).4 This literature, however, focuses almost exclusively on the United States, generating
insights for migration from poor to rich countries. Brazil, however, stands apart from the United States and
the other main immigrant receiving country—Argentina.5 Its wages and per-capita GDP were substantially
lower (Bolt and van Zanden 2020; Williamson 1995), its agricultural sector was relatively larger, and its
institutions were uniquely extractive.6 These features of the Brazilian economy make Brazilian immigration
a closer historical analog of modern immigration to developing countries than is any other immigration
flow during this period. The unique and important position of the Age of Mass Migration as a source of
insights for the economics of immigration, combined with Brazil’s unique status in this context as a relatively
poor, agricultural, and undeveloped destination country, thus enables us to better understand the effects of
The main empirical challenge that we face is the endogeneity of immigrants’ location choice within
Brazil. To address this challenge, we adapt to the Brazilian case an identification strategy previously used
by Sequeira, Nunn, and Qian (2020) to study the effects of immigration in the United States during the Age
of Mass Migration. This strategy creates an instrumental variable for a municipality’s immigrant share of
population based on the interaction of aggregate immigrant arrivals and the development of the rail network,
which the historical evidence shows was an important method for immigrants to reach their destinations
(Holloway 1980; Lanza, Manier, and Musacchio 2023).7 Intuitively, we compare two municipalities, one of
which was linked to the railroad in the year of a large immigration inflow, and the other of which was not
linked in that year. The former, by virtue of having access to the rail network in the year of a large inflow, is
predicted to have a greater share of immigrants relative to population.8 This method enables us to control
for rail linkage directly, addressing concerns that rail was built targeting specific areas or had direct effects
on the local economy. We also show that municipalities linked during immigration booms were similar to
those linked during lulls, obviating concerns that the timing of the construction of the rail network and the
timing of immigrant inflows were directly linked (Sequeira, Nunn, and Qian 2020).
4 The value of historical perspective has also been exploited in studies of the effects of immigration in the context of the
Bracero program (e.g., Clemens, Lewis, and Postel 2018; Lee, Peri, and Yasenov 2022).
5 Brazil was the third most important of these destinations in terms of number of immigrants. Canada was a close fourth
the labor force, and especially of the immigrant labor force—about 40 percent in 1920, as compared to about 15 percent in the
United States and 17 percent in Argentina in 1895. Moreover, in the case of the United States, the bulk of immigration provided
labor to the manufacturing sector (Lafortune, Lewis, and Tessada 2019). In Brazil, immigration was targeted to agriculture.
7 Indeed, the Hospedaria dos Imigrantes in Santos, where immigrants were lodged at arrival in São Paulo, was linked directly
to the railway network, and immigrants were often provided with tickets to reach their destinations. The same was true of the
immigrant hostels in the other major ports of arrival.
8 We advance this strategy by exploiting annual variation in the extent of the rail network rather than decadal variation of
2
Our main finding, based primarily on data that we digitized from the 1920 Brazilian census, is that
municipalities with a higher share of European immigrants in 1920 had greater farm values per hectare,
which we interpret as indicating greater development of the agricultural sector. This is true not just for the
total farm value, but also for each of its three constituent components—land, infrastructure, and tools and
machines. The finding that immigration affected not just land prices, but also the other two components is
crucial for two reasons. First it alleviates the concern that our outcome variable captures local character-
istics other than agricultural development, which would be capitalized in land values. Second, the value of
infrastructure, tools, and machines is linked to the development and productivity of the agricultural sector,
which is our ultimate object of interest. Our preferred specification indicates that a one-standard deviation
increase in a municipality’s share of European immigrants generated a 0.7-standard deviation increase in its
farm values per hectare. We show that these results are robust to using different variations of our instru-
ment and to excluding a variety of sets of municipalities that may have been systematically different from
the average municipality—those hosting immigrant colonies, large coffee producers, the earliest places linked
We also investigate the mechanism for the effect of immigration on farm values. What we find to be the
most substantial mechanism is changes in land use patterns. In particular, we find that a greater share of
European immigrants led to an increase in the share of farmland cultivated (as opposed to being left fallow
or as forest), and that this increase in the intensity of cultivation was responsible for about one quarter of the
effect of immigration. We argue that this mechanism reflects temporary immigrants exerting greater labor
effort than natives or permanent immigrants. Such a mechanism is in line with a large body of literature
showing both theoretically and empirically that temporary immigrants increase their work effort (or labor
supply) while in the destination,9 with the fact that a substantial portion of Brazilian immigration from
Europe was temporary (Hatton and Williamson 1998; Lesser 2013), with historical accounts of substantial
effort exerted by Brazilian immigrants (Cinel 1991; Florea 2023; Sánchez-Alonso 2007). Consistent with this
notion, we show that the effect of immigration on farm values was the product of immigrant labor, not immi-
grant ownership. Moreover, using farm-level data from São Paulo state and exploiting within-municipality
variation, we confirm that immigrant labor and not immigrant ownership affected farm values. These results
imply that when immigrants transitioned to ownership, indicating permanent residence, the benefits of their
presence for farm values dissipated. We also investigate, and either rule out or show to be unimportant
9 See Dustmann (1994, 2000), Dustmann, Bentolila, and Faini (1996), Dustmann and Görlach (2016), Epstein and Venturini
(2011), Galor and Stark (1991), Hill (1987), Klinthäll (2006), Kyarko and Chartouni (2017), Vijverberg and Zeager (1994), and
Wahba (2022).
3
relative to the land-use mechanism, several other mechanisms—immigrant arrivals increasing the demand
for land or providing labor that would otherwise be absent to aid in the exploitation of land; increased coffee
cultivation; and increases in the capital intensiveness of agriculture in response to immigration in the form
To assess the overall impact of immigration on economic development, we test whether immigration,
by facilitating agricultural development, slowed Brazil’s structural transformation. Such a test addresses a
long-standing debate about the role of agricultural development in promoting or delaying structural transfor-
mation (Asher et al. 2022), which is also present in the Brazilian historiography (Suzigan 2000, pp. 23–47).
We find that immigration did not slow, and in fact may have accelerated Brazil’s structural transformation.
In addition to a decline in the agricultural share of the labor force, we find a positive effect of immigra-
tion on the literacy of both native- and foreign-born individuals, suggestive evidence that immigration was
associated with increased industrial employment, and no evidence that immigration reduced female labor
force participation, which would have been detrimental for industrialization. We also find no evidence of an
adverse impact on institutions in the form of an increased presence of rentiers, whose presence may have
This paper advances a fundamental literature within the economics of immigration—that studying the
effects of immigration on the receiving country (Bansak, Simpson, and Zavodny 2020; Borjas 2014). The near
exclusive focus of this literature on the effects of immigration in developed countries creates an important
blind spot given the importance of developing countries as destinations for immigrants. The combination
of the recognized benefit that historical perspective brings to advancing the economics of immigration and
Brazil’s unique position in the Age of Mass Migration as a major migrant destination that bears a stronger
resemblance to modern developing countries than any other destination in that period, enables us to enrich
this literature by shedding new light on the effects of immigration in developing rather than developed
countries.
This paper also contributes to the literature focusing on the economics of the Age of Mass Migration (e.g.,
Abramitzky and Boustan 2017; Hatton and Ward 2019), and more particularly to studies of the effects of
immigration in this period (e.g., Abramitzky et al. 2023; Ager et al. 2021; Cohen and Biddle 2022; Price, vom
Lehn, and Wilson 2023; Tabellini 2020).10 Just as the economics of immigration has focused on developed-
10 In addition to bringing a different perspective with its focus on Brazil, this paper provides an important insight on the
effects of immigration to the United States in the Age of Mass Migration, albeit in a counterfactual sense. Specifically, the paper
sheds light on the what the effects may have been had immigrants settled in large numbers in the US South. In reality, few
immigrants to the United States settled outside the Northeast and Midwest. But contemporaries repeatedly discussed a desire
for the labor supply that immigrants would provide in the South (Benton-Cohen 2018; Goldin 1994; US Congress 1911). Indeed,
there were a number of unsuccessful efforts to encourage Europeans to settle in the US South, and subsidized immigration—an
4
country destinations, this literature has focused largely on the United States, where immigrants arrived in
pursuit of high wages in an industrializing economy (Hatton and Williamson 1998; Lafortune, Lewis, and
Tessada 2019; Williamson 1995). Latin America and particularly Brazil, remain understudied even though
Brazil was the third-most popular overall and the second-most popular destination after the United States
in the 1890s (Ferenczi and Willcox 1929; Sánchez-Alonso 2019). Within the relatively small literature on the
Brazilian experience of the Age of Mass Migration, this paper is most closely related to Lanza, Manier, and
Musacchio (2023), who have found evidence of a linkage between the subsidized immigration program and
coffee productivity in the state of São Paulo. Beyond this, most research focuses on the long-term effects
of immigration on income and human capital accumulation in specific regions of Brazil (e.g., de Carvalho
Filho and Monasterio 2012; Klein 1995; Stolz, Baten, and Botelho 2013; Witzel de Souza 2018). This paper
provides the first causal study of the effects of immigration on Brazilian agriculture in the Age of Mass
Migration that covers the entirety of Brazil, and the whole of the immigration flow, whether subsidized or
unsubsidized, contributing to the long-standing debate about the role of immigration to the development of
the largest Latin American economy (e.g., Alston et al. 2016; Holloway 1980; Papadia 2019).
2 Background
Understanding the effects of immigration on the economies of receiving countries is a fundamental goal of
the economics of immigration. Canonical studies focus on the labor-market effects of immigration, largely
in the United States after the transition to its current immigration regime in 1965 (e.g., Abramitzky and
Boustan 2017; Borjas 2003, 2014; Card 1990, 2005; Hanson 2009; Kerr and Kerr 2011), with a smaller set
focusing on the effects of immigration in other modern developed countries (e.g., Dustmann, Schönberg, and
Stuhler 2016; Manacorda, Manning, and Wadsworth 2012). This literature is enriched by studies focusing
on the effects of immigration in the United States during the Age of Mass Migration (e.g., Abramitzky et al.
2023; Ager et al. 2021; Cohen and Biddle 2022; Hatton and Williamson 1998; Price, vom Lehn, and Wilson
2023; Tabellini 2020), which exploit a variety of advantages of this historical setting, such as the long time
horizon, open borders, the ability to follow individuals over time, and differences in economic structure to
important feature of Brazilian immigration—was considered but was ultimately banned by the Foran Act in 1885. In the later
years of the Age of Mass Migration, southern and eastern European immigrants were criticized for their supposed unwillingness
to settle in the US South (Benton-Cohen 2018; Zimran 2022). As a result, what may have occurred if these large flows had
materialized, either spontaneously or if subsidized immigration had come to fruition, remains unknown. This paper sheds light
on what might have been.
5
shed light on the economics of immigration in general.11
Although these studies have enriched our understanding of the effects of immigration on receiving
economies, the focus of nearly all of them is on rich countries and largely on flows from poor to rich countries.
This is true in the case of studies of the modern United States, which draws the bulk of its migrants from
Latin America and Asia (Abramitzky and Boustan 2017). It is also true of studies of the United States in
the Age of Mass Migration. Most immigrants to the United States in this period were from countries with
substantially lower wages (Williamson 1995). Moreover, although it was more agricultural than it is now,
the US economy was far more industrialized than that of any other major origin or receiving country of the
Age of Mass Migration (Abramitzky and Boustan 2017; Hatton and Williamson 1994; Hatton and Ward
2019).12
The ultimate result of the focus on the United States in both the modern and historical literatures is that
migration to developing countries is poorly understood, particularly its effects on the receiving economies.
Indeed, with a small number of exceptions (e.g., Biavaschi et al. 2018; Gindling 2009; Lanza, Manier, and
Musacchio 2023; Özden and Wagner 2014), previous literature focuses on developing countries as the source
rather than the destination of migrants (Hanson 2009). A corollary of this, given the agricultural nature of
many developing economies, is that the effects of immigration on the agricultural sector are poorly understood
relative to other sectors (c.f., Abramitzky et al. 2023; Clemens, Lewis, and Postel 2018; Lanza, Manier, and
Musacchio 2023). Moreover, there are a number of reasons to suspect that the effects of immigration in
developing countries are different from those in developed countries. All of the factors that combine to
determine these effects—the origins and selection of immigrants, their substitutability with natives, the
sectors comprising their economies, and the duration of immigrants’ stays in the destination, among other
factors—are likely to be different. As a result, studies of the effects of immigration in a developing country
can, both in isolation and in comparison to the effects in rich countries, help to advance the empirical and
11 Related to this is work by Clemens, Lewis, and Postel (2018) and Lee, Peri, and Yasenov (2022) on the Bracero program
(1942-1964), which was a conduit for substantial migration from Mexico to the United States. Though not perfectly comparable
to the Age of Mass Migration, this phenomenon also provides a setting of relatively unencumbered migration from which to
gain insights on the economics of migration. Also related are studies of the long-run effects of historical migration on modern
outcomes (e.g., Burchardi, Chaney, and Hassan 2019; Sequeira, Nunn, and Qian 2020).
12 Indeed, the bulk of studies examining the effects of immigration in the United States during the Age of Mass Migration
focus on the twentieth century, or even on the end of the Age of Mass Migration with the imposition of country-of-origin
quotas. Thus, although the United States was strongly agriculturally focused in the early Age of Migration, this is not the
period generally studied when focusing on the effects of immigration.
6
2.2 Brazil in the Age of Mass Migration
Over 3.5 million European immigrants entered Brazil between 1850 and 1920; Figure 1 plots the time series of
Brazilian immigration. Nearly 1.5 million of these arrived between 1888—when the government implemented
a subsidized immigration program, in large part to provide labor for coffee cultivation after the abolition
of slavery—and 1900. This made Brazil the second most popular immigrant destination in the New World
in this period, trailing only the United States (Ferenczi and Willcox 1929, p. 550).13 The largest single
group of immigrants in this period were from Italy, where immigrants were recruited for subsidized labor
contracts from the north of the country. Over 80 percent of immigrants were subsidized in the pre-1900
period, possibly reflecting the limited attractiveness of Brazil as a destination due to its relatively low wages
and living standards, the fresh memory of slavery, and the perceptions of an adverse disease environment
(Papadia 2019).
The colono contract was at the center of the subsidized immigration program, which was particularly
important in São Paulo as the epicenter of coffee production (Lanza, Manier, and Musacchio 2023).14 Under
this scheme, immigrants received free passage and lodging, and were responsible for caring for and harvesting
coffee trees for a three-year contract period. In order to reduce the incentive for return migration, the colono
contract required adult male immigrants to be accompanied by their families (Klein 1995). However, the
evidence shows that this requirement was not strictly enforced, as about 35% of all immigrants processed at
São Paulo from 1911 to 1920 were returnees (Holloway 1980, p. 56). Lesser (2013) documents that in order
to receive the subsidy, single migrants that had met during or just after the voyage reported to be a “family,”
which may help explain why only 46 percent of immigrants remained permanently in the state of São Paulo
(Sánchez-Albornoz 1986).
The immigrant experience in Brazil began at reception centers, known as Immigrant Hostels (Hospedarias
dos Imigrantes), which were present in each of the three main entry ports of Santos in the state of São Paulo,
Rio de Janeiro, and Salvador in the state of Bahia. At these hostels, immigrants could sleep, eat, and, if
necessary, receive medical attention or vaccinations after being registered. The hostels also had direct access
to railways, which facilitated the transportation of immigrants to their final destination. The São Paulo
hostel, which processed most migrants, was the venue for the matching of immigrants arriving under the
subsidy program and the coffee plantations. In general, these immigrants had one week after arrival to find a
13 European immigration to Brazil began with the establishment of agricultural colonies in southern Brazil by German and
Italian immigrants in the 1820s (Foerster 1919). There was also a wave of immigration of Americans from the US South in the
wake of the Civil War (Dawsey and Dawsey 1995) and efforts made to recruit European sharecroppers to grow coffee after Dom
Pedro II’s crackdown on the illegal Atlantic slave trade in 1850 (Barman 1999).
14 Subsidized immigrants were also recruited for mining in Minas Gerais.
7
farm on which to work, and upon signing a contract would be provided with a train ticket to their destination
Brazilian immigration changed substantially at the beginning of the twentieth century. Concerns about
the conditions of migrants in Brazil, particularly of those residing in colonies and working on coffee planta-
tions, led to bans on subsidized migration by several European governments (Lesser 2013). Most notably, the
Italian Decreto Prinetti in 1902, which made subsidized emigration illegal, was targeted mainly at limiting
migration to Brazil.15 In part as a result of these bans, subsidized migrants no longer made up the majority
of entrants to the country, with their share falling to about 40 percent (Cameron 1931). Although these bans
did not halt mass migration to Brazil, as Figure 1 shows, they did lead to a change in the origin of migrants.
In particular, Figure 2 shows a decline in the share of immigration coming from Italy with a commensurate
increase in the share from Portugal and Spain.16 The shift in migrant origins was coupled with changes
in settlement: whereas immigrants arriving before 1900 were almost entirely directed to agricultural areas,
those entering after 1900 settled in large numbers in cities in the states of São Paulo and Rio de Janeiro
Although it is well established that immigrants were more numerate and literate than the Brazilian
population (Rocha, Ferraz, and Soares 2017; Stolz, Baten, and Botelho 2013), direct evidence on the selection
of immigrants is limited. It is possible that subsidized immigrants were negatively selected, as subsidies
significantly relaxed liquidity constraints, allowing the relatively poor and unskilled to migrate (Angelucci
2015; Belot and Hatton 2012; Chiquiar and Hanson 2005; McKenzie and Rapoport 2010; Orrenius and
Zavodny 2005; Spitzer and Zimran 2018). Beyond this speculation, the few studies addressing the selection
of Italian and Portuguese migrants, the two major immigrant groups in Brazil, provide mixed evidence.17
Despite policymakers’ efforts, return migration was prevalent. Italian data on return migration, which
are available from 1905 onwards, indicate that between 50 and 75 percent of immigrants returned to Italy.18
15 Prussia also nominally prohibited emigration to Brazil as early as 1859, and similar measures were implemented for the
the north and those after coming primarily from the south. See Online Appendix Figure A.1 for the division of immigrants by
origin in the 1920 census.
17 Fernández-Sánchez and Tortorici (2023) show that Portuguese migrants, who mostly moved to Brazil, were on average
positively selected on the basis of literacy. Determining the selection of Italians is more difficult given the highly segmented
destination choice patterns of this group (Hatton and Williamson 1998; Spitzer and Zimran 2023). But given the early dominance
of northern Italy in the migratory flow to Brazil, due in part to the fact that migration subsidies were offered exclusively to
migrants from the north of Italy (Hatton and Williamson 1998, p. 102), and that migrants from this region to the United States
were negatively selected (Spitzer and Zimran 2018), it is likely that the early migrants were negatively selected. Hatton and
Williamson (1998, p. 121) also find that farmers from Italy, who tended to be relatively poor, were more likely to travel to
Brazil than they were to the United States, possibly in search of land. However, the shift of Italian emigration to a largely
southern-Italian phenomenon at the turn of the twentieth century may have been associated with a more positive selection, as
migrants from this region who emigrated to the United States were positively selected (Spitzer and Zimran 2018, 2023).
18 We have not been able to locate similar data for the other main immigrant source country, Portugal.
8
Foreign observers widely believed that those who remained were exploited under the colono contract (Lesser
2013), fueling the bans on subsidized immigration. Recent scholarship has debated whether this was true,
providing a more nuanced story: immigrants were able to transition to land ownership after a few years
on the fazenda (Klein 1995; Lanza 2021). More specifically, Holloway (1980, p. xvi) documents that many
first-generation immigrants were likely to become owners of small and medium-sized farms. However, the
specific mechanisms through which immigrants achieved this transition have not been identified.
Altogether, Brazil’s immigration and economy bear some important similarities to those of the other
major migrant destinations—the prevalence, at least from the later nineteenth century, of migrants from
the poorer European periphery, the high rate of return migration, and, in Argentina’s case, the size of
the agricultural sector (Droller and Fiszbein 2021; Lesser 2013). But many features set it apart. Most
dramatically, there were substantial differences in development between Brazil and the other two major
migrant-receiving countries in the Americas, as shown in Figure 3: Brazil was, by a substantial margin,
the poorest of the three countries (Bolt and van Zanden 2020); indeed, Argentina was one of the 10 richest
countries in the world at the eve of World War I and had living standards similar to those of the United
States (Spruk 2019). In addition, the concentration of Brazilian immigrants in agriculture was unique
in comparison to Argentina and the United States, where most immigrants provided labor outside the
agricultural sector (Pérez 2017): in Brazil, approximately 40 percent of immigrant men worked in agriculture
in 1920 (Online Appendix Figure A.2) as opposed to about 15 percent in the United States and 17 percent in
Argentina in 1895. Subsidized migration was also uniquely important in Brazil. The United States explicitly
banned subsidized migration beginning in 1885, and although there is evidence of subsidized immigration in
Argentina, it did not have the relevance it did in Brazil (Lesser 2013). Brazil also had weaker institutions
and worse governance, reflected in low access to justice and an inefficient public sector, as well as a high
concentration of economic power and a highly unequal land distribution (Naritomi, Soares, and Assunção
2012).19 Understanding the impacts of immigration in this context can thus provide new insights beyond
those coming from studying the effects of immigration in the United States and even the more comparable
Argentina.
Research addressing the effects of immigration in Brazil dates at least to Dean’s (1969) classic account of
the industrialization of the state of São Paulo, which had become the industrial engine of Brazil by 1920
19 While substantial inequality was present in Argentina in the early twentieth century, it was not nearly as extreme as in
9
(Palma et al. 2021). He assigns a direct role to migrants, but the crucial group of immigrants in this account
is the bourgeois immigrant—relatively wealthy and skilled, and mostly active in industry and commerce—
rather than the modal immigrant workers in agriculture. Conversely Dean (1969) argues that the bourgeois
immigrants in the agricultural sector—both those who started off as landowners and those who became
landowners at a later stage—had no detectable generalized positive effect on Brazilian local development
because of an insurmountable advantage of domestic planters, potentially arising from superior knowledge,
Among the more recent literature on the Brazilian experience of the Age of Mass Migration, Lanza,
Manier, and Musacchio (2023), the work most closely related to ours, provide the clearest evidence on
the effects of immigration. They use the same farm-level data for the state of São Paulo that we use
(though aggregated to the municipality level in their case) to study the effect of immigration as part of the
subsidized immigration program on agricultural output and capital adoption. Arguing that the assignment
of immigrants to municipalities within this program was random and comparing municipalities with a greater
immigrant share to those with a smaller share, they find that a greater share of immigrants was associated
with greater coffee output per farm and the adoption of more agricultural tools in 1920.
Other studies of the effects of Brazilian immigration focus in large part on the long-run effects of immigrant
human capital or of immigrant colonies and schools established by or at the behest of immigrants (de Carvalho
Filho and Colistete 2010; de Carvalho Filho and Monasterio 2012; Rocha, Ferraz, and Soares 2017; Stolz,
Baten, and Botelho 2013; Witzel de Souza 2018).20 These studies also tend to focus on only a portion of the
Brazilian immigration experience, limiting themselves to either a single source country (e.g., Witzel de Souza
2018) or region of Brazil (e.g., de Carvalho Filho and Monasterio 2012). More broadly, the understanding
of the effects of immigration in Brazil tend to focus on immigration’s connection to coffee production in São
Paulo (Holloway 1980), leaving the role of immigration in the development of other regions and sectors less
clearly understood. In particular, what remains lacking is an understanding of the effects of both subsidized
and unsubsidized immigration on contemporary outcomes covering all of Brazil and addressing directly the
potential for endogenous location choice by immigrants. This paper contributes such a study.
20 Feler, Musacchio, and Reis (2016) study the effects of immigration on banking in the 1940s and 1950s. Tang and Monteiro
10
3 Conceptual Framework
The expected effect of immigration on Brazil’s agricultural sector is theoretically ambiguous. The simplest
way in which immigration could impact this sector is by simply adding to the agricultural labor force. In
an environment in which the agricultural frontier was rapidly expanding, a shortage of labor could prevent
land from being cultivated; in such a situation, additional labor provided by immigration can increase the
value of land that previously could not be cultivated. Such a force would have been particularly strong
in this environment in which the valuable coffee sector was growing and demanding increasing amounts of
labor. Such an effect need not prevail, however, if, for instance, native and immigrant labor were perfectly
substitutable and natives relocated within Brazil in response to the arrival of immigrant labor.21 Similar
arguments could be made for immigrants increasing the demand for land and investing in farm capital in
the form of tools and machines where land would otherwise be uncultivated or in lower demand.
The predicted effect of immigration is complicated by the likelihood that immigrants and natives were
fundamentally different from one another, and thus not perfectly substitutable. For instance, immigrants
may have possessed certain characteristics that made them particularly productive agricultural workers, such
as specialized agricultural knowledge or greater human capital. If this were the case, a greater concentration
of immigrants would spur local agricultural development, which would ultimately be reflected in higher farm
values. Similarly, immigrant labor’s complementarity with capital may have differed from that of natives.
Importantly in the Brazilian context, immigrants may have uniquely enabled the opening of land to coffee
production.
Immigrants may also have faced different incentives than natives. For instance, temporary migrants, who
made up a substantial share of migrants to Brazil in this period, may have been incentivized to exert greater
labor effort than natives or permanent immigrants while in Brazil, which would in turn contribute to greater
land values where they settled. Such a mechanism is consistent with evidence that temporary immigrants
substitute inter-temporally, exerting greater labor effort in the destination and enjoying greater leisure at
home (Dustmann 1994, 2000; Dustmann, Bentolila, and Faini 1996; Dustmann and Görlach 2016; Epstein
and Venturini 2011; Galor and Stark 1991; Hill 1987; Holloway 1980; Klinthäll 2006; Kyarko and Chartouni
The effects of immigration on sectors outside of agriculture in a largely agricultural economy are also
21 In such a situation, immigrant arrivals could lead to the increase of land values elsewhere in Brazil, if, for instance,
immigrant arrivals led natives to relocate to the frontier where labor was previously scarce. Unfortunately, no identification
strategy based on the comparison of different municipalities within Brazil can identify such an effect absent detailed data on
internal migration, which do not exist.
11
theoretically ambiguous. It has been posited that greater agricultural productivity could encourage structural
transformation (Johnston and Mellor 1961; Montero and Yang 2022; Timmer 1988), but it has also been
suggested that it can lead to specialization in primary production, discourage human and physical capital
accumulation, hinder the development of other sectors of the economy, and ultimately delay structural
change (Matsuyama 1982). The existing empirical literature is equally ambiguous (Asher et al. 2022; Bustos,
Caprettini, and Ponticelli 2016; Bustos, Garber, and Ponticelli 2020; Foster and Rosenzweig 1996; Hornbeck
and Keskin 2015), suggesting that the effect of agricultural development may be strongly context-dependent.
In the Brazilian case, one body of literature argues that industry only started to develop rapidly once the
agricultural export sector, led by coffee, was disrupted by events such as the First World War and the Great
Depression. Another, however, has argued that the development of the agricultural export sector was a
crucial precursor for the development of other sectors of the economy, particularly industry (Suzigan 2000).
The ambiguity of theory and existing empirical evidence regarding the effects of immigration on an
agricultural developing economy, and in turn on that economy’s structural transformation, implies that
these effects are ultimately empirical questions. Our analysis seeks to answer these questions, guided in our
search for potential mechanisms and effects by the theory outlined above.
4 Data
Our analysis is based on data we digitized for this project from the 1920 Population and Agricultural
Census of Brazil (Directoria Geral de Estatística 1922). The 1920 census was the first complete population
census successfully carried out in Brazil since 1872, and the first ever agricultural census covering the whole
country. While this means we do not have access to repeated data over time, the census provides a very
rich set of variables at the municipality level that capture economic, population, human capital, and labor
force characteristics.22 We also use complementary data from a variety of other sources, mainly as control
variables throughout the analysis, as well as farm-level data from the state of São Paulo to bolster some of
The 1920 census provides data on the average monetary value of farms (agricultural establishments) by mu-
nicipality in milréis—the currency of Brazil at the time—in total and broken down into three components—
22 Note that we exclude Acre from the analysis, as data for this territory are not consistently reported.
12
land, infrastructure, and tools and machinery.23 These establishments were often made up of a single plot
of land, but could also refer to multiple plots in the same municipality managed by the same person, group
of people, or organization (e.g., the government).24 Combined with information on the size of farms, these
data enable us to compute our main outcome variable—the average value of farms per hectare of land. We
consider farm values per hectare to be a measure of agricultural development, which includes any factor
making the local agricultural sector more productive and valuable. One concern with the use of farm val-
ues as a measure of agricultural development is that they include the value of land, which in turn would
capitalize local characteristics and amenities potentially unrelated to immigration. Fortunately, the other
two components of farm values—improvements and tools and machines—are strictly related to agricultural
productivity, and thus ensure we are indeed capturing the effects of migration on agricultural development.
Moreover, our control variables are designed to capture a broad range of additional factors affecting farm
values, and our identification strategy addresses the potential for endogenous location choice by immigrants.
We also collect data on a series of factors that may have affected the value of farms through their
relationship with immigration. The first set of variables covers the state of the labor force: we use population
density (inhabitants per km2 ) and agricultural employment density (workers employed in agriculture per
km2 ). As measures of land use, we use data on the share of farm land cultivated and the share of cultivated
farmland by planted crop.25 We also measure the use of tools and machines in agriculture: specifically we
use data on the share of farms with tools—plows, harrows, seeders, cultivators, harvesters, and tractors—and
As previous literature has shown that agricultural development, or its absence, can influence the transfor-
mation of the economy (e.g., Abadie, Gu, and Shen 2023; Asher et al. 2022; Bustos, Garber, and Ponticelli
2020; Hornbeck and Keskin 2015; Lewis 1954; Matsuyama 1982; Montero and Yang 2022; Schultz 1964;
Timmer 1988), we also examine four sets of outcome variables related to structural change. To measure hu-
man capital formation, we use data on literacy—the share of individuals who could read and write—which
23 Directoria Geral de Estatística (1922, Volume III, 1a Parte: Agricultura, pp. 298-385)
24 As defined in the census, agricultural establishments are “the whole extension of land subject to the exclusive administration
of an owner, tenant, stakeholder or administrator, who directly manages the cultivation of crops or livestock by themselves or
with the help of paid staff” (Directoria Geral de Estatística 1922, Volume III, 1a Parte: Agricultura, page 7). Land cultivated
in urban settings was excluded from the census, as were farms with an annual production worth less than 500 milréis. This
essentially means excluding establishments practicing subsistence agriculture, and focusing, instead, on commercially oriented
farms. To give some perspective, 500 milréis was approximately 107 times the average daily wage of a plough-man living in a
rural area in 1920 (Directoria Geral de Estatística 1922, Volume V, 2a Parte: Salarios, p. XXV).
25 These crops include rice, maize, wheat, beans, potatoes, manioc, cotton, sugarcane, tobacco, castor beans, coffee, cocoa,
13
the census reports separately for immigrants and natives.27 As indicators of economic structure, we use
data on the share of workers employed in agriculture, in industry, and in the public sector. We also use
the population share of individuals living on income from property or investments (rentiers) as a measure
of the presence of local landed elites.28 To measure state capacity, we use data on public finances, including
(export) tax revenue per capita and expenditure per capita in both education and public services. Finally,
we collect data on the female to male ratio among the employed population by economic sector (agriculture
and industry).
We use data on the total population and number of European immigrants by municipality to construct
our main explanatory variable—the population share of European immigrants by municipality.29 We focus
on European immigration for two reasons. First, the historical literature has documented that, during the
Age of Mass Migration, nearly 90 percent of the immigrant flows to Brazil came from Europe (Lesser 2013;
Sánchez-Alonso 2019). Second, the exogenous variation that our identification strategy relies on is partially
Our identification strategy also relies on variation in railway access at the local level. We obtain these
data from Giesbrecht (2023), which allow us to identify the first station built in each municipality as well as
the year when its construction was completed—that is, the year when each municipality was linked to the
railway network. We then compute two variables with this information—the number of years that a given
municipality had been connected to the railway network by 1920 and an indicator variable for municipalities
We collect data on a number of municipality characteristics that may have affected farm value and immigrant
settlement to include as control variables in our analysis. To capture proximity to international and domestic
markets, we create three variables—distance to the nearest port or frontier custom house, distance to the
nearest principal city, and distance to the nearest principal town.30 We also collect data on the location
27 Directoria Geral de Estatística (1922, Volume IV, 1a Parte: População, pp. 20–481)
28 Directoria Geral de Estatística (1922, Volume V, 5a Parte: População, Tomo I pp. 180–625, Tomo II pp. 6–825.)
29 Directoria Geral de Estatística (1922, Volume IV, 1a Parte: População, pp. 550-887). The computation of this variable im-
plies excluding immigrants mainly from Asia (Japan) and South America (Argentina, Paraguay, and Uruguay), who represented
about 12 percent of the immigrant population. The exact text of the immigrant data in the original source is “Popoulção es-
trangeira do estado de XX segundo a nacioladidade e o sexo, inclusivo os estrangeiros que adoptaram a nacionalidade braziliera.”
30 These features are identified using a map of Brazil created by the International Bureau of the American Republics (IBAR)
14
of immigrant colonies from the same source and from Gagliardi (1958) for the state of São Paulo. We also
create a battery of variables to control for differences in geographic conditions across municipalities, including
surface area, ruggedness, altitude, latitude, longitude, and the interaction of latitude and longitude. Finally,
we use data from the Global Agro-Ecological Zones project (Food and Agriculture Organization 2021) to
construct three variables that capture the suitability of land for agriculture and the adaptability of land for
the production of different crops. These variables consist of the first two principal components of suitability
for all major crops reported in the census except rubber,31 and the Herfindahl-Hirschman Index (HHI) of
suitability, capturing how concentrated land suitability is in each municipality, with lower values indicating
We complement our municipal-level analysis with data from the 1904–1905 Agricultural Census of the state
of São Paulo (Secreteria da Agricultura 1906–1910). The data from this source are similar to those coming
from the 1920 census, reporting the share of cultivated farm land, the share of cultivated farm land by
planted crop, employment density (workers per hectare), and the breakdown of employment by foreign or
native birth. But these data are reported at the level of the farm rather than the municipality. In total,
we have information for over 40,000 farms across 163 municipalities. This source provides information on
land values, as well as farm ownership—that is, whether the farm was owned by a foreign- or native-born
Online Appendix Tables A.1 and A.2 present summary statistics for all of the variables in our dataset. Figure
4 presents maps displaying the geographic distribution of our main outcome variable (panel a) and our main
explanatory variable of interest (panel b). The south and southeast are shown at increased magnification,
as these regions received the majority of migrants. A number of features of our data are readily apparent.
The first is that there is a concentration of high farm values and high immigrant shares in the vicinity of
São Paulo, in the main coffee growing area of the southeast. We will present a number of exercises verifying
that our results are not driven by this region. The second is that there was considerable variation in both
31 Specifically, this is the low input, no irrigation land suitability data for beans, cocoa, coconut, coffee, cotton, maize, potato,
the data), Colistete (2015), and Luna, Klein, and Summerhill (2014) for previous uses of this source.
15
farm values and immigrant shares throughout the country.
Panel (a) of Figure 5 presents the geographic evolution of the Brazilian railway network over time—part
of the variation that contributes to our instrumental variables strategy. The expansion of the network inland
from major ports over time is clear.33 Notably, there appears to have been an important regional component
to the rail network. Rail was virtually absent from the North, and evolved into several geographically
distinct networks rather than one unified one. For this reason, and because differences across regions in
migrant settlement patterns, we posit, verify, and exploit the fact that the impact of rail on immigrant
5 Empirical Strategy
Our main estimating equation for the effect of immigration on farm value is given by
where FarmValuei is the average value per hectare of farms in municipality i, ImmSharei is the population
share of European immigrants in municipality i, j are region or state fixed effects,34 and Xi is a vector of
municipality-level covariates that we use to control for a number of factors that may influence farm value,
such as local geographic conditions—ruggedness, altitude, surface area, latitude, longitude, the interaction
between latitude and longitude, and metrics capturing the quality of land for agricultural activities—and
the linear and quadratic distance to the nearest port or custom house, principal city, and principal town.35
We also control for the years a municipality was connected to the rail network and whether it had not yet
been linked by 1920. Our main results are reported with robust standard errors, but all results are robust
to correcting for spatial correlation (Colella et al. 2019; Conley 1999), as we show in Online Appendix B.
Regardless of the richness of our controls, estimating the causal impact of immigration on farm value is
complicated by the likely endogeneity of immigrants’ destination choices.36 For instance, immigrants may
have settled in places with better land quality (beyond our ability to control for it), or where other factors,
33 The first railway station was completed in 1854. While the railway network expanded significantly into the interior starting
from the last decade of the 19th century (Figure 5), Brazil’s railway mileage in 1914 was equivalent to that of the United States
in the 1850s (Herranz-Loncán 2014; Summerhill 2003).
34 Online Appendix Figure A.4 presents a map of political divisions of Brazil, showing the country’s regions and the states
ment system was random, which contributes to the validity of our OLS regressions. But these represented only a portion of
the immigrant arrivals—which also included unsubsidized immigrants and immigrants to other states—whose effects we are
interested in understanding.
16
such as better management, were available. Immigrants’ settlement patterns may also have been influenced
by local elites, whose presence could also have impacted agricultural productivity.
The direction of the resulting bias, however, is unclear. A natural concern is that our estimates would
overstate the effect of immigration if immigrants were to disproportionately settle in areas where local char-
acteristics were responsible for greater land values. But the available historical evidence suggests instead
that immigrant settlement patterns were such that our estimates might instead be biased downwards.37 In
particular, there is substantial historical evidence indicating that migrants often did not settle in the most
economically favorable locations. One reason is that migrants had very little information about the final
destination of their migration. Even more strikingly, they sometime had little say in where they eventually
settled within a state or broader region, needing to choose a destination based on labor demand during their
one-week stay at the immigrant hostel (Lanza, Manier, and Musacchio 2023). This lack of choice and the
limitations to free movement within Brazil for some time after arrival in the country, as well as frequent
maltreatment by landowners, manifested themselves in widespread discontent on the part of the migrants,
especially in the earlier phases of mass immigration (da Costa 2000; Fausto 1999). Immigrant colonies—a
Brazilian peculiarity, which saw the state cooperate with private planters to create rural settlements for
migrants—also highlight difficulties in the migrant experience in Brazil. Although research has shown that
municipalities featuring such colonies experienced faster development later on (de Carvalho Filho and Monas-
terio 2012; Rocha, Soares, and Ferraz 2017), this type of migration was not generally seen as particularly
fruitful by contemporaries. One reason was the perception that the migrant colonies were not located in
Migrants may also have been incentivized to settle in areas predisposed to have lower land values. For
instance, some migrants may have chosen to settle in less economically dynamic areas with lower land values
(to the extent they had a choice) in exchange for the prospect of an easier access to land ownership. Historians
have argued that the prospect of land ownership was indeed a strong pull factor for migrants, especially for
the largest immigrant group, Italians (Holloway 1980). Seeking out lower land prices was likely also salient
Nonetheless, the potential for endogenous location choice must be addressed. To overcome the identi-
fication challenge, we implement an instrumental variable strategy based on the interaction of immigrant
inflows and the expansion of the Brazilian rail network, following Sequeira, Nunn, and Qian’s (2020) study
of the effects of immigration during the Age of Mass Migration in the United States. The intuition of this
37 Of course, measurement error in our regressor of interest could also be responsible for attenuating our estimates and would
be addressed by instrumentation.
17
instrument is to compare two otherwise identical municipalities, one of which was linked just before a year
of large immigrant inflows and the other of which was linked just after. Because of the importance of rail in
linking migrants to their destinations, they would be more likely to settle in a municipality that was linked
to rail at the time of their arrival. The municipality linked to rail just before the large immigrant inflow
would thus receive immigrants from that wave, while that linked in the following year would not. These
initial settlement patterns would then affect subsequent settlement patterns by creating migrant networks
that subsequent immigrants might follow into these destinations (Spitzer and Zimran 2023). For this reason,
even temporary migration—important in light of the high rate of return migration—would be affected by
this variation.
form
1920
1 X
AvgImmSharei = ImmFlowt ⇥ Railwayit 1, (1)
✓i t=1855
where ImmFlowt is the immigration flow to Brazil year t, normalized by Brazil’s population size, Railwayit 1
is an indicator variable for the presence of a train station in municipality i in year t 1, and ✓i is the number
of years that municipality i had been connected to the railway network by 1920.38 This equation captures a
number of refinements that we make to Sequeira, Nunn, and Qian’s (2020) identification strategy. The first
is that we use annual data on the state of the rail network rather than data by decade.39 We also make a
slight departure by dividing by the number of years that a municipality was linked to the rail network (✓i )
rather than the number of years in the study period, though our results are robust to using Sequeira, Nunn,
and Qian’s (2020) normalization.40 Dividing by the number of years linked gives a sense of the number of
immigrants that we might expect to observe at a given point in time, which is what we will see in the 1920
census.
Given the potential for heterogeneity in the predictive power of the instrument in its first stage, we
interact the instrument with region indicators to exploit variation in the strength of first-stage identification
38 In Online Appendix C, we show that our results are robust to an alternative definition of rail connectedness in which a
municipality is considered connected to the rail network if another municipality whose centroid is within 100km of its own has
a rail station.
39 We focus on railway linkage in year t 1 rather than in year t to ensure that municipality is linked for the entire year
rather than only some, potentially small, fraction.
40 These results are available upon request.
18
across regions.41 The first-stage regression equation for our IV strategy is thus
where j is a region-specific coefficient. We also show that our results are robust to exploiting variation at
the state level in Online Appendix D.42 The value of the instrument for each municipality is presented in
Figure 5(b). While the geographic extent of the non-zero instrument value matches that of the railroad (by
construction), as shown in panel (a), this map also makes clear that the variation across space is not precisely
the same as that in panel (a)—a fact arising from the incorporation of immigrant inflows in a particular year
The controls most crucial to our identification are, following Sequeira, Nunn, and Qian (2020), the
number of years that a municipality was connected to the railway network by 1920 and an indicator variable
for municipalities that were not connected by 1920.43 These controls address the obvious concern that rail
linkage may have had direct effects on economic activity (Summerhill 2005), and that the location of rail
construction was not random, likely targeting areas where economic activity was or would be greater (e.g.,
As in the case of Sequeira, Nunn, and Qian’s (2020) application of this instrumentation approach, per-
haps the main identification concern facing our instrument is that municipalities connected to the railway
network during an immigration boom may have been systematically different from those connected during
an immigration lull. Such differences could arise if, for example, aggregate immigrant flows increased when
locations with greater economic potential were connected to the railway network. This concern is mitigated
by the fact that the historical literature has documented that these fluctuations were influenced by a number
of global and national macroeconomic factors, including changes in the price of coffee, the increase in labor
demand due to the abolition of slavery, the implementation of the Decreto Prinetti in 1902, the First World
41 Abadie, Gu, and Shen (2023) show that limiting attention to subsamples in which the instrument does have a strong first
stage can result in bias. They also show, however, that the method that we implement, also used by Deryugina et al. (2019),
Dix-Carneiro and Kovak (2017), Jackson, Johnson, and Persico (2016), and Pascali (2017), provides more reliable estimates.
Abadie, Gu, and Shen (2023) caution that this method may be problematic where there are many different subsamples, but
our case, with five regions in Brazil, is unlikely to face such issues.
42 Our main results include a demonstration that our results are robust to controlling for state fixed effects.
43 As in Sequeira, Nunn, and Qian’s (2020) application of this identification strategy, including these controls implies that the
identification technically arises from the functional form restriction in which the control for years of rail linkage is linear whereas
the instrument is a non-linear function of a municipality’s years of rail linkage (since the year of linkage is the sole determinant
of years of linkage). But, again as in Sequeira, Nunn, and Qian’s (2020) application, the non-linearity of the instrument is
not arbitrary, but is instead the product of actual variations in Brazilian immigration rates. In addition, our normalization by
years linked to the network provides further non-linearity. The combination of the linear control for years of linkage, the control
for whether a place was ever linked, and an instrument in which the variation is determined by immigrant arrivals is simply
to ensure that the identification derives not from how long a place was linked to the rail network but only from when in the
immigration cycle it was linked. We illustrate this nonlinearity graphically in Online Appendix Figure A.6.
19
War, and global macroeconomic shocks such as the Panic of 1907 (Hatton and Williamson 1998; Sequeira,
Nunn, and Qian 2020; Spitzer 2015; Spitzer, Tortorici, and Zimran 2022). To address these concerns more
formally, we follow Sequeira, Nunn, and Qian (2020) by comparing the observable characteristics of locations
that became linked during immigration lulls to those linked during immigration booms.44 We operationalize
this test by defining booms as years with an immigrant inflow above the previous five years’ moving average
and defining lulls conversely. The booms and lulls are identified in Figure 1. Columns (1)–(3) of Table
1 present the means of the observable characteristics for the full sample and for each group of locations.
Column (4) tests for the statistical significance of differences between the groups, finding that the two sets of
municipalities were, in fact, systematically different, though these differences were, for the most part, with
respect to geographic variables, capturing the gradual rollout of the railway from the coast. But columns (5)
and (6), which repeat the analysis controlling for region and state fixed effects respectively, show that the
differences are largely explained by the linkage of different parts of the country at different times, and that
within region and states the differences are statistically significant in only a small number of cases. Thus,
the evidence does not support concerns that railway expansion may have responded to immigrant inflows or
vice versa.
Table 2 presents our main results, estimated both by OLS (panel A) and using the instrumental-variables
strategy introduced above (panel B). All variables discussed in this table are standardized, meaning that
the coefficients can be interpreted as standard deviation changes in the outcome variable induced by a
one-standard deviation increase in the share of European immigrants. Columns (1)–(4) use total farm
values per hectare as the outcome, while columns (5)–(7) divide the farm value outcome into its constituent
components—land, infrastructure, and tools and machines. Our OLS results reveal a statistically significant
positive relationship between the share of European immigrants and farm value per hectare: a one-standard
deviation increase in the immigrant share was associated with a 0.6-standard deviation increase in farm
value. Adding controls for land quality (column 2), distance to domestic and international markets (column
3), and state fixed effects (column 4) has only a negligible effect on the magnitude of the estimates and has
little impact on their precision. Dividing farm value into its constituent components shows that the effect
of immigration was realized for all three—roughly equally for land and infrastructure, and with a somewhat
44 In order to use the 1872 census for this test, we aggregate our 1920 municipalities into larger minimum comparable areas.
20
smaller effect for tools and machines. The results for the individual components of value help to shed light on
the mechanisms for immigration’s effect. Notably, that the effect goes beyond the value of land alone suggests
that the results are not purely the product of greater demand for land or of local amenities capitalized into
the value of immobile factors (Bleakley and Rhode 2022). The effect on tools and machines also indicates an
interesting complementarity between immigration and capital. We investigate these potential mechanisms
Panel B of Table 2 presents our instrumental variables estimates. This panel shows, in support of
the relevance of our instrument, that our first-stage F -statistics are nearly 5 times larger than the weak
instrument critical value of the LIML estimator with one endogenous regressor and 5 instruments, 4.84
(Bound, Jaeger, and Baker 1995; Stock and Yogo 2005).45 Our IV estimates corroborate the OLS estimates
of panel A, revealing a statistically significant positive effect of a greater share of European immigrants on
farm values in general and on each component. In our preferred specification in column (4), which controls
for state fixed effects, we find that a one-standard deviation increase in the share of immigrants yielded
In Table 3, we verify the robustness of our results to a number of sample restrictions.46 These sample
restrictions address concerns that should, in principle, be addressed by our instrumental variables strategy,
but which are nevertheless useful in ensuring that specific subsets of our sample are not driving our results.47
In Panel A, we exclude municipalities that contained immigrant colonies. These settlements were the product
of partnerships between private planters and national or state governments, which led to the creation of new
rural communities. This form of immigration has been associated with faster economic development as a
result of greater human capital accumulation (Rocha, Ferraz, and Soares 2017), but may also have been
built in economically unfavorable locations (Cameron 1931). Given the peculiar developmental history of
these places, their farm value could have been the product of forces other than immigration. In Panel B, we
exclude areas that were large producers of coffee in order to account for the crucial role that this commodity
played in shaping local development and attracting immigrant labor force. We define large coffee producers
as those municipalities in the top decile of agricultural land share dedicated to coffee production. Concretely,
this translates into excluding municipalities with a share of land dedicated to coffee production above 60
45 We use LIML given that the critical values for this estimator decrease as the number of excluded instruments increases,
a property that fits our setting well, but the results are very similar if we employ two stage least squares, as shown in Online
Appendix E. This is important as some of our robustness checks are based on 2SLS estimation. Our F -statistics are also greater
than thresholds for smaller numbers of instruments, which may be important given that not all of the 5 instruments may enter
into the first stage significantly.
46 We do the same for the individual components of farm value in Online Appendix F.
47 Online Appendix Figure A.5 shows which municipalities are dropped in each case.
21
percent.48 In Panel C, we exclude municipalities obtaining a railway station in the first three decades of
the rail network expansion. It is possible that municipalities connected earlier may have been systematically
different from those connected later on in a way that our controls are not be able to capture. Finally, in
Panel D we exclude large population centers—defined as municipalities in the top quartile of the population
distribution in 1920—in order to address the concern that economic centers may be significantly influencing
our results or that agriculture may not have been particularly important in these places. In all cases, we find
no reason to believe that our results were driven by any of the concerns that we address, and, in general, we
find little evidence that these concerns even influenced the magnitude of our estimates.
7 Mechanisms
Having established a large, robust causal effect of European immigration on farm value, we now examine
potential mechanisms that may explain this effect. We approach this exercise in three steps. First, in Table
4, we use our instrumental variables strategy to test whether the variables that operationalize our proposed
mechanisms were, in fact, affected by immigration. Next, in Table 5, we evaluate the impact of controlling for
this mechanism on the coefficient on the European share in our instrumental variables analysis, as in Panel
B of Table 2, with column (7) of this table showing the impact of controlling for all mechanisms. Finally, in
Table 6 we implement a Gelbach (2016) decomposition to determine the degree to which the coefficient on
the European share is changed by including the proposed mechanism as a control when all mechanisms are
included.49
The first mechanism that we test attributes the effects of immigration directly to its role in increasing the
size of the labor force in a particular place. That is, immigration may have increased the number of available
workers, enabling the exploitation of land, just as the official immigration program intended. A greater
population may also have increased local demand for land (though our results above for the components of
farm value suggest that the latter mechanism is unlikely to explain our results). We operationalize demand
48 We obtain similar results if we drop the top decile of municipalities by agricultural land area dedicated to coffee, or the
top decile of municipalities by volume of coffee production. The former approach, as shown in Online Appendix Figure A.5,
involves excluding the bulk of São Paulo’s coffee-producing region, which stands out in Figure 4. These results are available
upon request.
49 Note that because of technical difficulties arising from our use of multiple instruments the decomposition is performed for
the OLS analog of the regressions, not for the IV estimates, so the decomposition is not precise. But given the similarity of the
OLS and IV results, this is not a major concern.
22
for land using population density and the agricultural labor supply using agricultural employment density
These mechanisms, however, are not supported by the data. In columns (1) and (2) of Table 4, we find
no statistically significant relationship between immigration and either population density or agricultural
employment density. Indeed, the point estimates are negative, contrary to the effect of immigration on
density that would be required under such a mechanism. Consistent with this finding, although column (2)
of Table 5 shows that both measures of the availability of labor were positively related to the value of farms,
the European share coefficient is only minimally changed by the introduction of the labor force variables.
This result is confirmed by the Gelbach (2016) decomposition in Table 6, which shows, both for farm values
in total and for each individual component, that the inclusion of labor force variables has a relatively small
(in comparison to the other mechanisms that we explore below) impact on the coefficient on the European
share of population with virtually all of the effect operating through the value of land. These results rule out
what is perhaps the most obvious mechanism for the effect of migration on farm prices, showing instead that
the effect of immigration is connected to some peculiar characteristic of the immigrant labor force rather
The next set of mechanisms that we investigate concerns the use of land—specifically cultivation intensity
and the crop mix. We capture cultivation intensity with the share of farmland cultivated (as opposed to
being left fallow or forest). We measure the crop mix using two variables—the share of cultivated land
dedicated to coffee and the share of cultivated land dedicated to other cash crops (cotton, cocoa, sugarcane,
tobacco, castor beans, and rubber).50 The hypothesis is that some characteristic of the immigrants enabled
a more intensive production of coffee, and more generally may have either incentivized or enabled a change
in the crop mix. Immigrants may have also enabled greater utilization of the available resources, leading,
for example, to more intense cultivation of land. There is historical evidence pointing in this direction, as
immigrants under the subsidy program were able to, and derived a substantial share of their incomes, from
using the land between rows of coffee trees to cultivate other crops (Holloway 1980, p. 30).
Column (3) of Table 4 shows that a greater share of Europeans increased the share of farm land cultivated.
Columns (4) and (5) show that a greater immigrant share led to a greater share of land devoted to coffee
production, but had no impact on the share of land devoted to other cash crops. Columns (3) and (4) of
50 The residual category is “staple” crops (rice, maize, wheat, beans, potatoes, manioc, and coconut).
23
Table 5 control for the cultivated share of farms and for the crop mix, respectively. These factors were both
associated with greater farm values, and their inclusion leads to a substantial decline in the magnitude of
the European share coefficient, which constitutes evidence that these are mechanisms through which the
effect of the immigration share passed. This is confirmed by the Gelbach (2016) decomposition in Table
6, which shows that it was the cultivated share of farms that was responsible for the bulk of the reduction
in the effect of the share of Europeans on farm values. The production of coffee, while responsible for a
non-negligible change in the immigrant share coefficient, particularly with respect to the value of tools and
machines, appears to have been a less important mechanism despite the links between immigration and coffee
production.
Based on these results, we conclude that European immigrants enabled a greater share of farm land to be
cultivated, raising the value of the farm. As shown above, however, this was not the product of immigrants
providing labor where it was absent. Instead, it appears that immigrants provided some peculiar benefit
that was unique to them. We argue that this peculiar characteristic of immigrants was that they exerted
greater labor effort than native workers, and in particular that temporary immigrants exerted greater labor
effort than natives or permanent immigrants. A substantial literature has shown, both theoretically and
empirically, that when immigration is temporary, immigrants substitute inter-temporally, exerting greater
labor effort in the destination while enjoying greater leisure when returning home.51 Given the high rates of
return migration to Europe from Brazil, it is plausible that this inter-temporal substitution operated in our
case. The historical literature has also highlighted that migrants were reputed for their labor effort (Cinel
1991; Florea 2023; Holloway 1980; Sánchez-Alonso 2007). The historical literature also provides evidence of
a potentially related mechanism in which permanent immigrants who did not yet own land but who sought
to transition into landownership would have been incentivized to increase their labor effort until they had
saved sufficiently to acquire land. Indeed, the historical literature has highlighted that one of the incentives
driving immigrants in exerting labor effort was the possibility of eventually owning land (Holloway 1980;
Lesser 2013).
Table 7 presents evidence substantiating this view based on the logic that, if the effect of immigrants on
farm values came from temporary migrants, then permanent immigrants in the form of foreign-born land
owners should not exhibit the same effect. Columns (1) and (2) use the same municipality-level data from
the 1920 Census as in our analysis above. Column (1) shows that a greater share of European immigrants
51 In particular, see Dustmann (1994, 2000), Dustmann, Bentolila, and Faini (1996), Dustmann and Görlach (2016), Epstein
and Venturini (2011), Galor and Stark (1991), Hill (1987), Klinthäll (2006), Kyarko and Chartouni (2017), Vijverberg and
Zeager (1994), and Wahba (2022).
24
led to a greater share of farms that were foreign owned. But in column (2), we find no evidence that foreign
ownership was associated with greater farm values; indeed, the point estimate for the coefficient on the share
The 1920 census, however, does not enable us to explicitly separate native- and foreign-born agricultural
workers (it permits only the observation of the share of Europeans in the whole population). The 1904–
1905 Agricultural Census of the State of São Paulo, however, makes such a distinction, and also provides
information on land values, the nationality of farm owners, and number of foreign and domestic workers for
over 40,000 farms across 163 municipalities (Secreteria da Agricultura 1906–1910). Moreover, because the
data are reported at the level of the farm rather than the municipality, we can include municipality fixed
effects in order to exploit only within-municipality variation. Column (3) of Table 7 substantiates our main
result using the farm-level data, showing that a greater share of foreign-born workers was associated with
greater land values. Column (4) shows that foreign ownership had no such association. Column (5) includes
both variables in the regression. While we continue to find that a greater share of foreign-born workers
was associated with greater land values, the effect is completely dissipated for farms owned by a foreign-
born individual—the coefficient on foreign ownership is statistically significant and negative. Moreover,
the magnitude of the estimate is such that foreign ownership almost entirely eliminates the benefit of a
Altogether, the results of Table 7 are consistent with immigrants exerting greater labor effort as long as
they were temporary immigrants, but reverting away from this exertion upon purchasing land and becoming
a permanent immigrant.
We also consider the adoption of agricultural tools and machines as a potential mechanism for the effect of
immigration. We build on our finding that immigration increased all components of farm value, including
that of tools and machinery and on Lanza, Manier, and Musacchio’s (2023) findings that immigration
under the subsidized immigration program in São Paulo state led to greater adoption of agricultural tools
and machines. We operationalize this mechanism using the share of farms in the municipality that had
agricultural tools or machines. Column (6) of Table 4 shows, consistent with our results in column (7) of
Table 2, that immigration led to a greater share of farms using tools while column (7) shows that that
immigration had no effect on the share of farms using machines. Such a relationship can be rationalized by
52 We perform this exercise while recognizing the potential endogeneity of the share of farms owed by the foreign born in
25
considering tools as complementary to labor and machines as substitutes (Lanza, Manier, and Musacchio
2023). In Table 5, we find that farms that adopted agricultural tools were indeed more valuable, though
the effect is less than 0.2 standard deviations, and that the size of the European migrants share coefficient
is reduced by around 0.12 standard deviations when it is included. Notably, columns (2) and (3) of Table
6 show that the tool mechanism goes beyond the mechanical channel of increasing the tools and machines
component of farm values—tools are also responsible for reducing the coefficient on the immigrant share for
the land and infrastructure components of value as well. The magnitude of the impact is about one-third
that of the share of farms cultivated, and so we view the tools mechanism as second order in comparison to
it.
Our analysis has established a robust and quantitatively large positive effect of European immigration on
the agricultural sector in Brazil. As outlined in section 3 above, there are a variety of possible implication of
this effect for the rest of the Brazilian economy and its transition to industrialization and sustained economic
An important caveat is that we can only answer this question in the short run, since we observe our
outcomes shortly after the end of mass migration. In principle, development and structural transformation
may have continued along the same lines or changed direction in unpredictable ways in the decades after
our outcomes are observed, for instance due to a lag in the manifestation of the effects of migration through
channels like human capital accumulation. At the same time, our short-term analysis has the advantage of
not being influenced by subsequent events, such as the introduction of import substitution policies and the
many regime changes experienced by Brazil from the 1930s until the 1980s, which had their own, sometimes
In Table 8, we implement our IV strategy as above, but focus on a variety of outcomes that capture
differences in human capital formation (panel A), economic structure (panel B), state capacity (panel C),
and female labor force participation (panel D). For each set of variables, we present two specifications—
one including the whole sample and another in which we exclude large population centers (as above, these
are municipalities in the top quartile of population) in order to ensure that places that may not have
been particularly reliant on agriculture to begin with do not drive our results. On the whole, we find no
evidence that migration negatively affected other parts of the economy, or that it slowed down structural
26
transformation. In fact there are indications that the reverse may have been true.
Human capital formation has previously been positively linked to immigration in Brazil (de Carvalho
Filho and Monasterio 2012; Rocha, Ferraz, and Soares 2017; Witzel de Souza 2018), although not in a causal
framework such as ours. We capture human capital by analyzing the literacy rates of the whole population,
of natives, of females, and of children between the ages of 7 and 14. These variables are intended to capture
spillovers from migrants to the rest of the population. We find that European immigration had a strong
positive effect on all of our literacy measures: a one-standard deviation increase in the share of migrants
in the population led to a 0.7–0.8-standard deviation increase in each of the measures of literacy. The
positive link between immigration and human capital found in previous work is thus confirmed. This is not
surprising: immigrants had greater human capital to begin with and they were often successful in lobbying
for the creation of schools (de Carvalho Filho and Colistete 2010). These schools were presumably one of
the channels through which the provision of education improved at the local level, leading to higher literacy
Next, we focus on employment shares by sector, and specifically on the share of the labor force employed
in agriculture and in industry. These measures give an indication of the degree to which immigration aided
or slowed down structural change. We also study the effect of immigration on two variables capturing the
presence and influence of local landed elites. The first is the share of population made up of rentiers—people
relying on returns to wealth as their main source of income. The second is the share of the population
employed in public administration, capturing the tendency for local oligarchs to exert their influence by
placing loyalists in public administration (Graham 1990). Indeed, many parts of Brazil were characterized
by a plantation-based agricultural sector and connected oligarchic system known as coronelismo, in which
local landed elites offered votes in exchange for aid, employment, and protection, in a classic example of
clientelism and patronage (Nunes Leal 1977; Woodard 2005).53 The influence of landed elites is connected
with underdevelopment in the Brazilian context, as the rapid growth following the military coup of 1964,
which weakened these elites’ grip on power, demonstrates (Ferraz, Finan, and Martinez-Bravo 2022).54
We find that municipalities with more migrants had a lower share of workers employed in agriculture,
even when excluding large urban centers.55 We also find suggestive evidence that a greater immigrant
53 This phenomenon was particularly severe in rural areas, but the situation was only marginally different in coastal cities
and other urban centers, where other power groups, such as merchants and professionals, exerted influence alongside traditional
elites
54 It is important to note for our discussion of state capacity below that neither the oligarchs nor their clients in public
administration were keen to increase public revenues, given that they were mainly interested in power and authority, not
direct embezzlement or corruption involving public funds (Abreu and Lago 2001; Graham 1990). This ensures that oligarchic
entrenchment and fiscal capacity remain distinct in our analysis.
55 Note that the outcome in this case is the share of agricultural workers out of the labor force. The analysis in Tables 4, 5,
27
share led to a higher share of workers employed in industry, as indicated by the positive coefficient for
industrial employment, though the result is not statistically significant. In any case, we find no evidence
that immigration reduced industrial employment, which would indicate a slowing of structural change. In
fact, our results on the whole point to a valuable agricultural sector that demanded less, not more, labor.
This supports the view of agricultural development as a driver of overall economic development. We also find
no relationship between immigration and rentiers or public administration employees. Thus, immigration,
despite its positive effect on the agricultural sector, did not create a larger class of people living off their
We focus next on state capacity, which is a firmly established contributor to economic development.56 We
concentrate specifically on the ability of local governments to collect taxes (i.e., fiscal capacity) and on their
provision of public goods. We measure fiscal capacity using total tax revenues per capita, and tax revenues
per capita excluding export taxes. We exclude export taxes because trade taxes are generally considered
an indicator of low fiscal development, as opposed to direct taxes, and they are also strongly related to the
importance of the agricultural sector in the Brazilian setting, making them a poor measure of development
beyond primary production. We measure public good provision using per capita expenditure on education
We find that European immigration was strongly positively associated with greater fiscal capacity, par-
ticularly when export taxes are excluded, and when major urban centers are left out of the sample. We
also find suggestive evidence of higher per capita expenditure on public services in response to immigration,
although these estimates are not uniformly statistically significant. Altogether, these results indicate greater
Finally, we analyze the effect of immigration on the sex ratio, measured as women per man. We examine
this ratio in the population as a whole, in total employment, and in two key economic sectors—agriculture
and industry. Migration during the Age of Mass Migration was male dominated (Hatton and Williamson
1998), leading to potentially severely skewed sex ratios in locations where more migrants settled. Skewed
sex ratios, in turn, can have adverse consequences for attitudes towards women in the workplace and female
labor market participation (Grosjean and Khattar 2019). The economic changes arising from immigration
may have also reduced employment opportunities for women, who, in the Brazilian context, found gainful
and Prado (2012), Dittmar and Meisenzahl (2020), Epstein (2000), Hoffman (2015), and Johnson and Koyama (2017).
57 Public services comprise public hygiene, assistance and aid, police, justice and electoral services, infrastructure and sewers,
and public lights. The residual categories are the costs of running the local public administration and expenses related to public
debt. For more information on local finances in Brazil in this period see Papadia (2019).
28
employment in the industrial and service sectors more often than in the primary sector (Pena 1981). In
turn, reduced opportunities for women and a generally lower labor market participation may have negatively
As expected, we find a more male-skewed sex ratio in municipalities with more immigrants. The effect
is large both for the overall sample and when we exclude major population centers. But this male-skewed
sex ratio in the population does not translate into a statistically significantly male-skewed sex ratio in either
overall employment or employment in agriculture and industry. The lack of such an effect suggests the
presence of countervailing forces, which led to women compensating for the lower presence in the population
9 Conclusion
In this paper, we aim to better understand the effects of immigration on the receiving economy in the context
Simpson, and Zavodny 2020; Borjas 2014), the effects of immigration have been widely studied, but almost
exclusively in developed-country contexts, where the effects may be differ from those in developing countries.
Our study is situated in the context of Brazil in the Age of Mass Migration, enabling us to benefit from
the broad utility of studying this period for the economics of immigration and specifically from Brazil’s
unique position in this context as a destination that more closely parallels migration to modern developing
countries than to developed ones. Focusing on Brazil’s agricultural sector, we find that immigration led to
an increase in farm values per hectare, coming primarily from an increase in the share of land cultivated—
a mechanism that we, in turn, attribute to the exertion of greater labor effort by temporary immigrants
relative to natives and permanent immigrants. We find no evidence that this agricultural development
slowed Brazil’s structural transformation; indeed we find suggestive evidence that it may have accelerated
it by fostering human capital accumulation, reducing agricultural employment, and increasing female labor
market participation. Thus, immigrants enabled this developing country to exploit its natural resource
endowments, and may have eventually set it on the course of broad-based economic development.
29
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Figures
Figure 1: Immigrant arrivals to Brazil by year, and immigration lulls and booms
Note: Shaded areas are immigration booms, defined as years with an immigrant flow above the previous five years’ moving
average. The remaining periods are lulls. Gaps in the population data are linearly interpolated.
Source: Directoria Geral de Estatística (1908) and Instituto Brasileiro de Geografia e Estatística (1954) for aggregate im-
migration numbers. Bolt and van Zanden (2020) and Instituto Brasileiro de Geografia e Estatística (1954) for population
numbers.
1
Other
.8
Share of Brazilian Immigration
Spanish
.6
.4
Portuguese
.2
Italians
0
1850 1860 1870 1880 1890 1900 1910 1920
Year
Source: Directoria Geral de Estatística (1908) and Instituto Brasileiro de Geografia e Estatística (1954).
36
10000
8000
4000
2000
Brazil Argentina
United States
37
(a) Farm value per hectare
38
(a) Expansion of Brazil’s railway network (1850–1920)
39
Tables
Table 1: Balance test for observables: rail connection during immigration booms and lulls
40
Table 2: European immigration and farm value
Notes: *** p<0.01, ** p<0.05, * p<0.1. Robust standard errors in parentheses. The IV regressions are estimated using the
LIML estimator with the predicted share of Europeans interacted with region indicators as the instruments for the actual share
of Europeans. Sample includes all municipalities. The unit of observation is a municipality. All variables are standardized to
have mean zero and standard deviation one.
41
Table 3: European immigration and farm value, robustness tests
Notes: *** p<0.01, ** p<0.05, * p<0.1. Robust standard errors in parentheses. All regressions are by instrumental variables
estimated using the LIML estimator with the predicted share of Europeans interacted with region indicators as the instruments
for the actual share of Europeans. Sample includes all municipalities except those indicated in the panel heading. The unit of
observation is a municipality. All variables are standardized to have mean zero and standard deviation one.
Population Agricultural Cultivated Coffee Cash crops Share farms Share farms
density emp. density share of farms share share (no coffee) with tools with machines
(1) (2) (3) (4) (5) (6) (7)
Share Europeans -0.235 -0.115 0.817*** 1.019*** 0.0225 0.698*** 0.0418
(0.181) (0.170) (0.181) (0.202) (0.118) (0.111) (0.143)
Notes: *** p<0.01, ** p<0.05, * p<0.1. Robust standard errors in parentheses. All regressions are by instrumental variables
estimated using the LIML estimator with the predicted share of Europeans interacted with region indicators as the instruments
for the actual share of Europeans. Sample includes all municipalities. The unit of observation is a municipality. All variables
are standardized to have mean zero and standard deviation one. “All controls” includes all controls in column (4) of Table 2.
42
Table 5: Farm value and potential mechanisms
43
Table 6: Gelbach decomposition for the European share coefficient
Outcome
Farm Land Infrastructure Tools & machines
(1) (2) (3) (4)
Mechanism
Panel A: Labor force
Pop density 0.058* 0.049* 0.078 0.015
(0.032) (0.027) (0.050) (0.012)
Agr. emp. density -0.005 -0.002 -0.014 0.003
(0.005) (0.005) (0.010) (0.006)
Total labor force 0.053* 0.048** 0.064 0.018*
(0.029) (0.024) (0.042) (0.010)
Panel B: Land use
Cultivated share of farms 0.182*** 0.173*** 0.178*** 0.114***
(0.041) (0.041) (0.039) (0.030)
Coffee share 0.015** 0.016** 0.004 0.034**
(0.008) (0.008) (0.008) (0.012)
Other cash crops share -0.004 -0.004* -0.002 -0.004
(0.002) (0.003) (0.002) (0.003)
Total land use 0.193*** 0.184*** 0.179*** 0.144***
(0.039) (0.038) (0.037) (0.029)
Panel C: Tools & Machines
Share of farms with tools 0.060*** 0.058*** 0.046*** 0.083***
(0.012) (0.012) (0.011) (0.016)
Share of farms with machines 0.000 -0.000 -0.000 0.002
(0.000) (0.000) (0.000) (0.007)
Total tools & machines 0.060*** 0.058*** 0.046*** 0.085***
(0.012) (0.012) (0.011) (0.018)
All mechanisms 0.309*** 0.285*** 0.316*** 0.246***
(0.042) (0.40) (0.054) (0.035)
Notes: *** p<0.01, ** p<0.05, * p<0.1. Sample includes all municipalities. The unit of observation is a municipality. All
variables are standardized to have mean zero and standard deviation one. This table presents the results of a Gelbach (2016)
decomposition for the coefficient in columns (4)–(7) of panel A of Table 2. These estimates are by OLS.
44
Table 7: Farm values and foreign ownership
Notes: *** p<0.01, ** p<0.05, * p<0.1. Robust standard errors in parentheses. Regressions in columns (1) and (2) are
by instrumental variables estimated using the LIML estimator with the predicted share of Europeans interacted with region
indicators as the instruments for the actual share of Europeans in a sample including all municipalities where the unit of
observation is a municipality. Regressions in columns (3)–(5) are by OLS using the São Paulo farm-level data. All variables are
standardized to have mean zero and standard deviation one. “All controls” includes all controls in column (4) of Table 2.
45
Table 8: Implications for development and structural change
Notes: *** p<0.01, ** p<0.05, * p<0.1. Robust standard errors in parentheses. All regressions are by instrumental variables
estimated using the LIML estimator with the predicted share of Europeans interacted with region indicators as the instruments
for the actual share of Europeans. Sample in columns (1), (3), (5), and (7) includes all municipalities. Columns (2), (4), (6),
and (8) exclude municipalities in the top 25 percentiles of population. The unit of observation is a municipality. All variables
are standardized to have mean zero and standard deviation one. “All controls” includes all controls in column (4) of Table 2.
46