This paper examines how local consumption access varies within cities and its implications for urban inequality and residential sorting. Using a novel dataset from Brazil's Economiza Alagoas program that captures the universe of barcode prices across all formal retailers, I document systematic spatial variation in product availability, quality composition, and pricing within metropolitan areas. I find that retailers strategically adjust their offerings based on neighbourhood demographics: areas with higher income and population density feature greater product variety and a shift toward higher-quality "fancy" products. Notably, low-cost product varieties are priced higher in affluent neighbourhoods, suggesting price discrimination based on local market power. These patterns suggest consumption externalities whereby residents benefit from living near others with similar preferences and purchasing power. Thus, endogenous local consumption opportunities constitute a significant but previously unmeasured urban amenity that reinforces residential segregation by income. To quantify the welfare implications, I develop a quantitative spatial model where the local price index is endogenously determined by retailers' location and product mix decisions, which in turn depend on neighbourhood composition. By documenting how consumption access shapes the spatial distribution of residents within cities, this paper identifies a new channel through which market mechanisms can amplify urban inequality even in the absence of explicit barriers to mobility.
Poorly designed employment protection legislation (EPL) can lead to job destruction. In particular, tenure-dependent EPL can increase labor costs over time, often abruptly, inducing dismissals. This paper studies the effects of increased monitoring of labor rights in termination contracts by unions and the government in a large developing country, once workers complete one year of tenure. We exploited the elimination of this monitoring procedure in Brazil after the Labor Market Reform of 2017 to estimate its causal effects on job destruction. Through a differences-in-differences approach, we find that a significant proportion of workers below the eligibility threshold of increased monitoring were facing preemptive dismissals from their employers, that are trying to avoid detection of their irregularities during their employee’s dismissals. Tenure-dependent increased monitoring caused about 20% of average dismissals in the pre-Reform period for workers who had more than 11 and less than 12 months of tenure. Consistent with strategic avoidance behavior, we find that these effects were more pronounced for small firms and for employers in sectors and regions where inspections by the Ministry of Labor were less common. We also find that less educated workers are more vulnerable to the perverse incentives of this type of EPL.
I explore a property tax reform in São Paulo which creates spatial discontinuities in tax rates, increasing the costs of living in the city centre relative to the periphery. Using a Regression Discontinuity Design, this shock to demand of housing allows me to identify local supply elasticities. I also investigate the effect on equilibrium outcomes such as residents’ demographics and local amenities. I find heterogeneous housing supply responses, with the center being less elastic than the periphery of the city. While there were no observed changes in amenities, I find evidence of increased spatial inequality. Particularly, increases in tax rate in the city center were followed by an increase in the average income of its residents and the share of college graduates. These findings contribute to the understanding of how spatial frictions affect the equilibrium distribution of cities.