Publications

[WP,  in Portuguese, Presented at ANPEC Sul in July 2023]. 

Abstract

While studies have analyzed the sectoral reallocation of micro and small enterprises (MSEs), the literature often overlooks their influence on regional productive structures. This study addresses the critical role of MSEs in economic sophistication within a developing country context. Utilizing panel data from Brazil's industrial sector, we employ econometric models, including Fixed Effects (FE) and the Driscoll-Kraay (DK) estimator, to analyze 558 microregions from 2003 to 2015. The impact of within-sector dynamics on productive sophistication, measured by economic complexity, is examined. Robustness tests are conducted using instrumental variable models, such as Limited Information Maximum Likelihood (LIML), Two-Stage Least Squares (2SLS), and Generalized Method of Moments with Continuously Updating Estimates (GMM-CUE). Our findings demonstrate that a higher intensity of firm reallocation between micro and small size categories, measured by a within-sector turbulence index, has a positive and statistically significant impact on regional productive sophistication. This underscores the importance of policies aimed at fostering a dynamic business environment that facilitates market selection and resource reallocation.

[WP Presented at EAEPE in September 2023].

Abstract

Recent studies have explored the role of firm dynamics and the connection to job reallocation. However, limited attention has been devoted to the role of micro and small firms in this process, particularly about the quality of the jobs generated. Therefore, this article aims to measure the impact of micro and small firm dynamics on occupation diversification in Brazil, with specific emphasis on job quality. The study used data from 558 microregions within the Brazilian industrial sector between 2003 and 2015. Panel data were applied to three econometric models: Feasible Generalized Least Squares (FGLS), Driscoll–Kraay (DK) and Instrumental Variable (IV) models for robustness analysis, including Two-Stage Least Squares (2SLS), Limited Information Maximum Likelihood (LIML), and the Generalized Method of Moments with Continuously Updating Estimators (GMM-CUE). Our main finding reveals that the dynamics of micro and small firms positively impact occupation diversity in Brazil, leading to the creation of a wider range of job types. Furthermore, the frequency of change of firms from microenterprises to small businesses increases the occupation diversity in the Brazilian industrial sector. Our findings are significant in providing policy recommendations for developing countries to achieve a more diverse labor market.