Essays on the Labor Market Effects of Public Policies

Abstract

This dissertation investigates the labor market implications of policies tackling inequality. Chapter 1 investigates the implications of enforcing modest disability hiring quotas for workers and firms. Analysis exploiting variation in enforcement across firms reveals four findings. First, firms hire more workers with disabilities into low-paying jobs. Second, consistent with statistical discrimination, workers with disabilities experience reduced wage growth. Third, the quota does not come at a cost to workers without disabilities in terms of wages or employment, or to firms in terms of closure. Fourth, I estimate that the marginal worker with disabilities hired under the quota has a marginal revenue product close to their wage. Through the lens of a model of enforcement of hiring quotas with imperfect compliance, I show that the policy generates aggregate welfare gains. My findings demonstrate that, in labor markets under imperfect competition, mandating modest increases in employment for the disadvantaged can promote redistribution and improve welfare. Chapter 2 studies an anti-corruption policy --- corporate debarment, or blacklisting --- to understand how disclosing illicit corporate practices and the sanctions for these practices affect firm and worker outcomes. Exploiting a policy change in Brazil that imposed stricter penalties for corrupt firms, I find that debarment is associated with a sizable decline in employment and an increase in the probability of exiting the formal sector. I also document that workers' annual earnings fall after debarment. The impacts are driven by lost revenues from government contracts. The results shed light on the costs to workers in weighing the consequences of corruption crackdown. Chapter 3, joint with Ricardo Dahis, asks how administrative redistricting through the creation of smaller government units shapes local development. Exploiting a reform that led to sharp variations in the number of government units in Brazil, we find that voluntary redistricting spurs public services and economic activity in new local governments without hurting the rest of the country. The gains are concentrated in the public sector and in remote backwards areas. We provide evidence that these persistent gains are predominantly driven by the decentralization of decision-making power, rather than the increased fiscal revenues.