Research
PUBLICATIONS
"Increasing the Cost of Informal Workers: Evidence from Mexico" (with León Fernández Bujanda)
American Economic Journal: Applied Economics, Vol. 16. No. 1, January 2024, (pp. 377-411)
We estimate the effect of increasing the cost of informal jobs on formal firms' and workers' outcomes. We create a novel dataset combining administrative records and household surveys and exploit exogenous variation in the cost of informal jobs generated by over 480,000 random work-site inspections in Mexico. For informal workers, inspections temporarily increase the probability of being formalized at the inspected firm but also increase the probability of dissolving the informal match. At the firm level, increasing the cost of informal jobs at formal firms leads to persistently lower formal employment. Comparing workers who start a formal job shortly after or shortly before an inspection, we provide evidence consistent with current formality status affecting the probability of future formal job offers at competing firms.
"The Labor Market Effects of Facilitating Social Security Contributions under Part-Time Employment Contracts: Evidence from Colombia" (with Andrea Otero-Cortés and Leonardo Fabio Morales)
Labour Economics, Vol. 91, December 2024, 102630
We examine the impact of homogenizing the tax base between part-time and full-time labor contracts in a context with high informality. Using employer–employee matched administrative records and household survey data, we estimate the effects of a reform that eliminated a wedge in regulatory costs across different work schedules in Colombia, reducing the relative costs of formal part-time employment. We find that the reform increased the probability of entering the formal sector for previously informal part-time workers (the target population). Using pre-reform variation in firms’ demand for workers eligible for the policy, we find a 5.5% increase in formal employment at firms more exposed to the policy. Mean wages at these firms rose by 0.88% after the reform relative to those at firms that tend to hire fewer workers with no formal sector experience. Firms with more exposure to the reform also experienced higher churn, consistent with the policy creating incentives for firms to rotate across workers at a faster pace.
WORKING PAPERS
“Application Flows” (with Steven J. Davis) - R&R AEJ: Macro
We build and analyze a new U.S. database that links 125 million applications to job vacancies and employer-side clients on Dice.com, an online platform for jobs and workers in software design, computer systems, engineering, financial analysis, management consulting, and other occupations that require technical skills. We find, first, that posting durations are quite short, often only two or three days, with a median of seven days. Second, labor market tightness has tiny effects on posting durations. Third, job seekers display a striking propensity to target new postings, with almost half of applications flowing to openings posted in the past 48 hours. Fourth, applications per posting are much too uneven to reflect random search, even within narrow market segments and job categories. Moreover, posted offer wages play no role in explaining the deviations from a random-search benchmark. Fifth, intermediaries play a huge role on both sides of the platform: Recruitment and staffing firms account for two-thirds of all postings and attract most of the applications. We relate these and other findings to theories of labor market search.
“Wage Setting Protocols and Labor Market Conditions: Theory and Evidence” (with Stanislav Rabinovich and Ronald Wolthoff) - R&R Labour Economics
We theoretically and empirically examine how firms’ choices of wage-setting protocols respond to labor market conditions. We develop a simple model in which workers may be able to send multiple job applications and firms choose between posting wages and Nash bargaining. Posting a wage allows the firm to commit to lower wages than would be negotiated ex post, but eliminates the ability to respond to a competing offer, should the worker have one. We show that higher productivity lowers both the application-vacancy ratio and the fraction of firms posting a wage. On the other hand, an increase in the number of applications per worker raises the application-vacancy ratio while lowering the fraction of firms posting a wage. As a result, the equilibrium fraction of firms posting a wage may be positively or negatively correlated with the application-vacancy ratio, depending on the source of shocks. The model also implies that an increase in the number of applications per worker may lead to a decrease in the number of posting firms rather than a change in the wages posted by those firms. Empirically, we demonstrate that the model’s predictions are confirmed in a novel dataset from an online job board.
“Labor Market Tightness, Recruitment and Search Behavior”
We examine the effects of labor market tightness on firms' recruitment behavior and job seekers' activity. We use a novel dataset from an online job board with high-frequency information on over 5 million vacancy postings and 1.26 million job seekers between 2012 and 2017. We construct two measures of tightness: one, from job seekers' perspective, based on the rate at which applicants start and stop searching for jobs and another, from employers' point of view, based on mean application flows. We find that job seekers submit more applications when markets are tight, apply to postings offering higher wages, and focus their search on a narrower set of skill requirements, job function categories, and locations. Meanwhile, employers are more likely to post wages when markets are slack and, conditional on posting a wage, offered wages rise with tightness. The share of postings for independent contractors (instead of employees) increases with slack. We then study changes in search activity with the arrival of information using the 7-day window around regional unemployment announcements. Employers increase postings after a high-unemployment announcement, and the share of postings offering an explicit wage also increases. Job seekers browse more job postings, but submit a similar number of applications, allocating them across a wider set of job titles and locations.
"How Much Is a Formal Job Worth? Evidence from Mexico" (with Bhavyaa Sharma) - New draft coming soon
The marginal willingness to pay for a formal job for the average household in Mexico is MXN$1,013 pesos ($51 USD) or 19.4 percent of the average monthly wage. This valuation encompasses the various social benefits granted by a formal job, differences in pay and job stability, and any other attributes that make a formal job desirable. We obtain this estimate using a partial equilibrium model of joint labor supply with informal and formal contracts and search frictions estimated using simulated method of moments. We validate our structural estimates for the value of a formal job using an employer-employee-household matched panel dataset and exogenous variation in access to a formal job from over 300,000 work-site inspections. Model and reduced-form approach yield consistent estimates for the changes in labor supply and wages of a spouse after their partner receives a formal job offer. Household’s valuation of a formal job is 40% higher than the fiscal cost to the firm.
“"Everybody Fights an American War": The Effect of the US-China Trade War on Markets in Mexico” (with Daniela Puggioni and Alan Spearot)
We evaluate the impact of the US-China trade war on firms and workers in Mexico, a country that was not directly involved in the trade war but is one of the largest trading partners of the US, and one for whom the US is the major export destination. We find that significant trade diversion to Mexico occurred in response to the trade war between the US and China, and that this trade diversion had a significant and positive impact on workers and firms in Mexico. Using quarterly product-level import data from the US, we document that for every 1% increase in tariffs levied against China by the US, trade from China fell by 3%. But, in response to these same tariffs levied against China, US trade from Canada and Mexico rose by approximately 1%. Consistent with these facts, we use administrative data for exporting firms in Mexico and find that the difference in bi-annual export growth was 0.3% higher for products affected by the US-China trade war. Using quarterly, establishment-level data we also find that a 1% increase in a firm’s exposure to the trade shock increases blue collar employment and reduces social security payments. These effects on labor demand are concentrated among outsourced workers. The reduction in social security payments is consistent with a decline in formal employment.
"The Real Effects of Credit Supply Shocks During the COVID19 Pandemic" (with Carlo Alcaraz, Nicolás Amoroso, Rodolfo Oviedo, Alex Rivadeneira, and Horacio Sapriza)
We study the real effects of credit supply shocks during the COVID-19 pandemic in Mexico. To this end, we merge administrative micro-level data on the universe of bank loans with matched employer-employee social security records. For each firm, we measure its exposure to time-varying credit supply shocks. We find that when a firm experiences a one standard deviation increase in its exposure to banks’ credit supply shock, its exit rate decreases by 0.3 percentage points, and its annual employment growth increases by 1.8 percentage points. These effects are most pronounced among smaller firms, startups, unincorporated businesses, and businesses operating in sectors deemed non-essential by the government during the COVID-19 lockdown. Moreover, we find that workers with low layoff costs, like those with low tenure or temporary contracts, are more susceptible to separations after a negative credit-supply shock.
"The school-enrollment cutoff as a random tax: Child birth date and its effects on the household" (with Pablo Peña)
Cutoff dates for school enrollment—a ubiquitous feature of educational systems worldwide—produce different possibility sets for households with children born on different dates. Using survey data from Mexico we examine whether school-enrollment cutoffs affect labor supply. Our results are imprecise but suggest that mothers whose youngest child was born before the cutoff (and therefore were able to enroll their child in school one year earlier) are 0.8-1.2 percentage points more likely to work. This is equivalent to a 5-8% increase among the group of marginal mothers. We conclude that the school-enrollment cutoff is a random tax with little deadweight loss because most mothers are infra- or supramarginal.
"Measuring and Estimating Retail Productivity" (with Ajay Shenoy) - draft coming soon
We develop and apply a new method to estimate the productivity of small and medium retailers in developing countries. The method assumes a successful retail shop must 1) attract customers, 2) source and stock inventory, and 3) choose the right mix of products from the right suppliers. Our method estimates the productivity of a shop across all three dimensions. We apply our method to a novel retail-specific dataset collected through high frequency surveys of a sample of independent retailers in Lusaka, Zambia. Our preliminary results suggest the dimensions of productivity are correlated but also contain substantial independent variation. An entrepreneur can be highly productive in one aspect of running a shop but unproductive in others. Under these conditions, our model predicts that standard estimators would yield deeply misleading results. Policy interventions based on those estimators could actually lower social welfare.
"Labor Markets, Fiscal Policy and Inflation Dynamics: a Pandemic Perspective" (with Salem Abo-Zaid and Xuguang Simon Sheng)
The Covid-19 pandemic initially caused inflation to fall, then to rise sharply to a 40-year high. Vacancies and labor market tightness strongly correlate with inflation rates in the United States and major European countries. A labor search and matching model augmented with demand-side shocks and labor market matching frictions effectively explains these inflation dynamics. The extended model, which incorporates endogenous search intensity and recruiting intensity, captures the significant correlations between inflation and labor market variables. Downward nominal wage rigidity plays a role in wage and price inflation. Fiscal policy coupled with changes in matching efficiency produces the empirical patterns for inflation dynamics.
WORK IN PROGRESS
“Cyclical Behavior of Informal Employment and Self-Employment”
In this paper, I analyze the cyclical behavior of gross worker flows in Mexico focusing on “off-the-books” or informal workers employed at formal firms. I show that transitions across formal and informal employment differ significantly between self-employed workers and employees. I find that the share of informal workers employed at formal firms is countercyclical due to the decrease in the job-finding rate for formal jobs during recessions as well as the pro-cyclical behavior of within-firm informal to formal transitions. Flows from formality into informal self-employment are also pro-cyclical. This evidence suggests the distinction between informal employees at formal firms, formal employees and informal self employment is critical when attempting to model an economy with a large informal sector. Differences in the dynamics of informal employment and self-employment have important implications for unemployment fluctuations.
“The Hazards from Informality: Measuring the Consequences of Entering the Labor Market in an Informal Job”
In this paper, I analyze the effects of entering the labor force in an informal job in Mexico. Since job finding rates in the informal sector are higher than in formal employment, informal jobs can offer young individuals entering the labor force the necessary work experience to transition to better quality jobs. However, if informal employment sends a negative signal about a worker's quality, entering the work force in an informal job can lead to worse labor market outcomes in the future. In this paper, I use random inspections by the Ministry of Labor to analyze the labor market trajectories of informal and formal workers. I first show that establishments are more likely to hire formal workers after an inspection. Using the Labor Markets Trajectories Survey (MOTRAL), a survey that collects data on labor market outcomes between 2007 to 2012 for workers in Mexico, I compare the labor market outcomes of observationally equivalent workers hired before and after an inspection at inspected and non-inspected establishments to analyze the hazards from informality.
"Do Search Frictions in the Retail Sector Cause Upstream Misallocation?" (with Ajay Shenoy)
"The Effects of Changes in Age Based School Entry Cutoffs" (with Carlos Dobkin and Pablo Peña)
"Subsidizing Firm Entry in an Economy with Informality" (with León Fernández Bujanda)
"Transferring Retail Productivity" (with Heather Huntington and Ajay Shenoy)
Policy Publications:
Samaniego de la Parra, Brenda and Christian Viegelahn. (2021) “Estimating labour market transitions from labour force surveys: The case of Viet Nam” ILO Working Paper No. 35, International Labour Office.
Samaniego de la Parra, Brenda, Luis F. Munguia, y Leonardo Iacovone (2015). “El salario mínimo y la productividad empresarial” World Bank: Washington, DC. Mimeo.
Sara, Elder and Samaniego de la Parra, Brenda. “Why we must focus on the quality of jobs for youth: a note for the post-2015 development agenda” Work4Youth publication series, No. 23. International Labour Office. Geneva: ILO, 2014.
Sameer Khatiwada and Samaniego de la Parra, Brenda. “International Migration and Development” in World of Work Report 2014: Developing with jobs International Labour Office. 2nd ed. Rev. Geneva. ILO, 2014.
Jorge Davalos and Samaniego de la Parra, Brenda “Regional economic and labour market developments. Latin America and the Caribbean” in Global Employment Trends 2014: The Risks of a Jobless Recovery. International Labour Office. Geneva: ILO, 2014.
Brenda Samaniego de la Parra and Lopez-Moctezuma Jassán, Carlos. “Financial Inclusion through Mobile Financial Services: The Mexican Case” in Financial Inclusion: Theoretical and Practical Approaches. Alliance for Financial Inclusion and Central Bank of Ecuador, 2010.