Urban Migration and Wages : Evidence from Childhood Migration in Brazil

Despite the large urban-rural income gap in many developing countries, it remains unclear to what degree this reflects the causal impact of urban residency. This paper presents new evidence on the gains of urban migration by analyzing the effect of childhood urban migration on economic outcomes. Identification is obtained from an age at move design combined with Brazilian census data. The analyses reveal that spending the childhood in an environment one log-point denser increases earnings in adulthood by 2 - 3 percent, which is driven by an increase in educational attainment. The findings of this paper suggest the previous literature, which has exclusively focused on adulthood migration, significantly underestimated the income effects of urban residency