In the context of the urban economics, the recent transformation of the geographical distribution of employment in industrial countries is understood by the simultaneous effects of the pull of the cheap labor cost in the periphery and the agglomeration economies based on either Marshall-Arrow-Romer type localization economy or Jane Jacobs type urbanization economy. We analyze the case of the state of Rio de Janeiro, Brazil, applying the methodology of Glaeser et al. (1992). We found the effect of the cheap wage in attracting jobs but both MAR and Jacobs type externalities were not relevant for urban growth in the Rio de Janeiro State during 1985-2004. This may reflect the lack of momentum in the non-traditional industries in Brazil, especially in Rio.
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