2026 Theses Doctoral

Essays on Markets and Firms in Tunisia

Ali, Nadia

The three essays in this dissertation explore the following labor, trade, and entrepreneurship questions: What are the labor market reallocation effects of wage floors? What do fixed market-access subsidies do? And lastly, how effective is state support for high-growth entrepreneurship in a developing country? My co-authors and I examine these questions using experimental and quasi-experimental methods and a wide range of data including administrative and survey data in Tunisia.

The first chapter uses new employer-employee data to study the labor reallocation effects of wage floors. Many countries set wage floors by occupation for both low- and high-skill workers. Changes in these wage floors can induce wage compression within firms and reduce the skill premium. We examine the effects of this institution in the Tunisian banking sector, where a 2014 national collective bargaining agreement resulted in wage compression in some branches. We find modest overall employment effects masking substantial heterogeneity by age and skill level. Hires of young workers increase. High-skill young workers separate and move to banks with higher skill premia, suggesting they quit. Survey results confirm that young high-skill workers are more sensitive to wage compression. We interpret our results through a model of monopsony with binding wage floors and relative-wage concerns.

Our results highlight a novel channel through which occupation-specific wage floors shape labor market dynamics. In the second chapter, we study market-access subsidies. Many countries seek to promote exports by subsidizing market access, but evidence on such efforts has been mixed. We present the first randomized evaluation of a government financial-support program explicitly targeting exports, the Tasdir+ program in Tunisia. The program offered matching grants for fixed market-access costs but not variable costs. Tracking outcomes in administrative data, we find positive effects on exports on average. We find limited impacts on the number of destinations or exported products, which were stated policy targets. The finding that the fixed-cost subsidies expanded exports on the intensive margin but not the extensive margins of destinations or products stands in contrast to the predictions of several workhorse trade models.

The third chapter evaluates Tunisia’s “Startup Act,” a policy initiative to foster innovative firms through a “startup” label and a bundle of incentives including reduced social security contributions, corporate tax exemptions, easier access to foreign exchange, and simplified customs procedures. Detailed data on the program’s selection process allow us to identify marginal entrants and rejects, and hence limit selection on unobservables. Using a difference-in-differences strategy, the program is shown to increase survival and promote job creation. A back of the envelope cost–benefit calculation suggests that the program is cost effective.