Labor informality is a stark reality in most developing countries, and tax policy is often seen as a potential solution to this phenomenon. This paper studies the introduction of an income tax deduction program that aimed to affect the labor formality status of workers by changing the economic incentives of their employers. Using Brazilian survey data from before and after the policy change, I compare the labor market outcomes - such as the probability of being formally hired, number of hours worked, and hourly wages - of targeted and non-targeted workers in the same occupation with a difference-in-difference strategy. In addition, I extend this framework to evaluate whether there are heterogeneous effects of this tax policy based on eligibility to the Brazilian conditional cash transfer program.

Political connections have been documented to be beneficial to firms in both developing and developed economies, but little attention has been paid to the potential labor market effects of such relationships. This paper evaluates whether short-term political connections are enough to impact firm growth and its workers using data from local elections in Brazil and the Brazilian matched employer-employee data set. I exploit the exogenous variation that arises in a close elections framework to estimate the effects of clientelism on total payroll, average wage and tenure, and number of hires, separations and establishments at the firm level (as well as wage, tenure, and employment status at the worker level) with an event study approach. Further, I analyze if public procurement outcomes are affected by using municipality-level data from the largest state in the country, as this could be a possible channel through which clientelism affects firm growth.

with Michael Best, Renata Lemos, and Daniela Scur (funded by JPAL and IGC)

Master's Thesis, Fundação Getulio Vargas (FGV-EPGE)