Economic integration and upward mobility in Brazil

Are cities in emerging economies poverty traps or engines of opportunity? We use 13 y of linked employer–employee data covering all formal workers in Brazil to explore the mechanisms through which agglomeration promotes mobility for initially poor workers. We find that the cities that appear to enable more upward mobility in Brazil’s south are characterized by greater mixing of skilled and unskilled labor than similarly sized cities with less mobility in the north, where skilled workers disproportionately concentrate in the public sector. These findings suggest that the benefits of urbanization stem not only from the size of the agglomeration or its level of formal schooling but also from the social organization of production.