Work in Progress
Old and Informal: The Labor Market Effects of
Social Pensions in Brazil
How can informal economies protect those excluded from contributory systems without undermining incentives to formalize? As many of these countries undergo rapid demographic transitions, policymakers struggle to design sustainable and inclusive pension schemes. This paper examines the impact of expanding social pensions on local labor markets in Brazil. Leveraging administrative data on benefits and employment spells, as well as the quasi-random rollout of pension agency branches, I find that higher social-pension take-up increases private formal employment without affecting average wages. I can trace the local employment result back to individual responses by combining household survey data with administrative bank credit records. Four interrelated factors help explain the aggregate effect: increased household net income following pension receipt, a high marginal propensity to consume among beneficiaries, non-homothetic preferences that redirect spending toward formal retailers, and improved access to payroll-deducted loans.
Preliminary draft
How can informal economies protect those excluded from contributory systems without undermining incentives to formalize? As many of these countries undergo rapid demographic transitions, policymakers struggle to design sustainable and inclusive pension schemes. This paper examines the impact of expanding social pensions on local labor markets in Brazil. Leveraging administrative data on benefits and employment spells, as well as the quasi-random rollout of pension agency branches, I find that higher social-pension take-up increases private formal employment without affecting average wages. I can trace the local employment result back to individual responses by combining household survey data with administrative bank credit records. Four interrelated factors help explain the aggregate effect: increased household net income following pension receipt, a high marginal propensity to consume among beneficiaries, non-homothetic preferences that redirect spending toward formal retailers, and improved access to payroll-deducted loans.
Preliminary draft
Publications
The interpretation of 2SLS with a continuous instrument: A weighted LATE representation
With Luís Alvarez.Economics Letters (2024).
This note introduces a novel weighted local average treatment effect representation for the two-stages least-squares (2SLS) estimand in the continuous instrument with binary treatment case. Under standard conditions, we obtain weights that are nonnegative, integrate to unity, and assign larger values to instrument support points that deviate from their average. Our representation does not require instruments to be discretized nor relies on limiting arguments, such as those used in the definition of the marginal treatment effect (MTE). The pattern of the weights also has a clear interpretation. We believe these features of the representation to be useful for applied researchers when communicating their results. As a direct byproduct of our approach, we also obtain a representation of the 2SLS estimand as a weighted average of treatment effects among “marginal compliance” groups, without having to resort to the threshold-crossing representation underlying the MTE construction. The latter representation has an intuitive interpretation as well.
View on ScienceDirect
With Luís Alvarez.Economics Letters (2024).
This note introduces a novel weighted local average treatment effect representation for the two-stages least-squares (2SLS) estimand in the continuous instrument with binary treatment case. Under standard conditions, we obtain weights that are nonnegative, integrate to unity, and assign larger values to instrument support points that deviate from their average. Our representation does not require instruments to be discretized nor relies on limiting arguments, such as those used in the definition of the marginal treatment effect (MTE). The pattern of the weights also has a clear interpretation. We believe these features of the representation to be useful for applied researchers when communicating their results. As a direct byproduct of our approach, we also obtain a representation of the 2SLS estimand as a weighted average of treatment effects among “marginal compliance” groups, without having to resort to the threshold-crossing representation underlying the MTE construction. The latter representation has an intuitive interpretation as well.
View on ScienceDirect