Of Cities and Slums

62 Pages Posted: 4 Nov 2016 Last revised: 5 Jan 2019

See all articles by Pedro C. Ferreira

Pedro C. Ferreira

Graduate School of Economics at Fundacao Getulio Vargas (EPGE/FGV)

Alexander Monge-Naranjo

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Luciene Torres de Mello Pereira

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finan├žas

Date Written: 2016-10-01

Abstract

The emergence of slums is a common feature in a country's path towards urbanization, structural transformation and development. Based on salient micro and macro evidence of Brazilian labor, housing and education markets, we construct a simple model to examine the conditions for slums to emerge. We then use the model to examine whether slums are barriers or stepping stones for lower skilled households and for the development of the country as a whole. We calibrate our model to explore the dynamic interaction between skill formation, income inequality and structural transformation with the rise (and potential fall) of slums in Brazil. We then conduct policy counterfactuals. For instance, we find that cracking down on slums could slow down the acquisition of human capital, the growth of cities (outside slums) and non-agricultural employment. The impact of reducing housing barriers to entry into cities and of different forms of school integration between the city and the slums is also explored.

Keywords: Skill formation, Locations, Occupations, Structural transformation

JEL Classification: O15, O18, R23, R31

Suggested Citation

Cavalcanti Ferreira, Pedro and Monge-Naranjo, Alexander and Torres de Mello Pereira, Luciene, Of Cities and Slums (2016-10-01). FRB St. Louis Working Paper No. 2016-22, Available at SSRN: https://ssrn.com/abstract=2863717 or http://dx.doi.org/10.20955/wp.2016.022

Pedro Cavalcanti Ferreira (Contact Author)

Graduate School of Economics at Fundacao Getulio Vargas (EPGE/FGV) ( email )

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil
+55 21 559 5840 (Phone)
+55 21 553 8821 (Fax)

Alexander Monge-Naranjo

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Luciene Torres de Mello Pereira

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finan├žas

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil

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