2025 Theses Doctoral

Essays on Labor and Public Economics

Lemos, Marina

This dissertation consists of three essays on labor and public economics in the context of Brazil. More specifically, these essays explore topics related to relevant challenges faced by many developing economies, such as low access to higher education, labor informality, and political clientelism. In the first chapter, I study the effect of financial aid on the career trajectory of nontraditional college students. The second chapter focuses on the impact of an income tax deduction for employers on the labor formality status of their workers. At last, the third chapter investigates whether becoming a politically connected firm for the first time affects firm dynamics.

Chapter 1 examines the effect of financial aid on nontraditional college students, and whether it leads to an improvement in their labor market trajectories. I exploit a quasi-random variation in aid recipiency of the Brazilian federal student loan program, and compare loan takers against those who applied but did not take out the loan. I find that financial aid has a positive effect on degree persistence and completion, as well as robust evidence that nontraditional loan takers are more likely to be employed in higher-skilled occupations and by better quality firms after college, with no lasting negative impacts to their employment status or earnings. These results indicate that financial aid can positively disrupt the career trajectories of nontraditional students. In particular, this career upgrade seems to be partially driven by higher education completion. I also provide suggestive evidence that the cost-effectiveness of student loan policies that aim to increase college access for nontraditional students depends on the age at the time of application.

Chapter 2 studies the labor market effects of a tax reform that implemented an income tax deduction for employers of formal domestic workers. The objective of this policy was to reduce the formalization costs of informal housekeepers, a particularly vulnerable occupation in the labor market. I leverage the introduction of such a policy in the context of Brazil, and compare targeted and non-targeted housekeepers using a weighted event study design and household survey data. I estimate that the tax reform had a positive and significant impact on labor formality and hourly wages for targeted domestic workers, as well as a negative and significant effect on their number of hours worked per week. I also provide evidence that these results are mostly driven by housekeepers that were not eligible to the Brazilian conditional cash transfer program. At last, I show that the reform had a differential effect across the unconditional distributions of monthly and hourly wages but a negative impact on the distribution of weekly hours regardless of the decile in which the domestic worker was located.

Chapter 3 evaluates the impact of a newly-established political connection on firm growth, skill composition of its workforce, and survival. I focus on clientelistic relationships that are formed through a corporate campaign contribution. Using electoral and labor market administrative data, I employ a close election regression discontinuity design to evaluate this question in the context of Brazilian mayoral elections. I find that there are no sizable and long-lasting returns to becoming politically connected for the first time. Most estimated effects, for both levels and growth rates, are either not statistically different from zero or statistically significant but transient. I also present evidence that the establishment of a political connection has a heterogeneous effect depending on the size of the municipality, the relative importance of the corporate donation to the benefited candidate, the relative size of the campaign contribution to the firm’s finances, and the total number of donations over time and across elections.