The effects of immigration in a developing country: Brazil in the Age of Mass Migration

with Andrea Papadia and Ariell Zimran

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The majority of the 55 million migrants who left Europe during the Age of Mass Migration (1850-1920) went to the United States. A substantial fraction of this migration flow, however, was directed instead to South America, where it was no less important in shaping the development of the receiving countries than it was in the United States. While immigrants to the United States—particularly in the later decades of the Age of Mass Migration—found themselves in an economy that was rapidly industrialized, those who chose Latin America as their new home found themselves in a substantially more agricultural setting. Yet, the effects of their arrival are not understood nearly as well as in the American case. 

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In this paper, we study the effects of immigration to Brazil during the Age of Mass Migration on its agricultural sector in 1920. Because Brazil in this period was a low-wage country with weak institutions and a prominent agricultural commodity export sector, it resembles modern developing economies, in which the effects of immigration are poorly understood, particularly in comparison to the economics of immigration’s focus on developed-country destinations. 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 or permanent immigrants. Finally, we find that it was unlikely that immigration’s effect on agriculture slowed Brazil’s structural transformation.