Research
Research
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Abstract: This paper studies who bears a value-added tax (VAT) on housing. In 2016, Chile extended its 19 percent VAT to the sale of new housing, while sales of existing units by households remained untaxed. Using administrative records of about 900,000 residential sales, we compare the prices of new and existing units before and after the reform. A simple incidence model with an untaxed substitute shows that this comparison is a lower bound, because buyers who shift toward existing units also raise their prices. Buyers bear most of the tax. In 2017–2019, the price per square meter of new units rose by 10.3 percent relative to existing units, about three quarters of full pass-through, and new units became slightly smaller. The prices of existing units more exposed to new housing rose by 3 to 4 percent relative to the least exposed; with the least exposed units as the control group, the pass-through is close to full. Because land is outside the tax base, prices rose more where land is a smaller share of value, as in apartments. Finally, the exemption for contracts signed before the reform brought forward more than three months of sales, which were offset over the following two years.
Abstract: Labor markets in large metropolitan areas are segmented. The literature has referred to these micro-markets as ``Local Labor Markets" and has typically used location and industry, or occupation, to delineate them. This is problematic for two reasons: 1) delineations rely on arbitrary administrative boundaries for regions, industries, and occupations, and 2) this implicitly assumes that the structure of the larger market does not change. In this paper, we use the metro expansion in Santiago de Chile to show that transport infrastructure can change what constitutes a local labor market and thus have knock-on effects on labor market power and aggregate outcomes. We build a simple theoretical framework that delivers testable predictions to guide our analysis. We find empirical evidence that after a relevant reduction of commuting costs, workers from previously small markets have higher probabilities of changing local labor market and enjoy higher wages. Lastly, we find that in labor markets affected by the reduction of commuting costs, mean markdowns fall around 10 percentage points.
Publications
Publications
Rural-Urban Migration at High Urbanization Levels, with Matias Busso and Juan Pablo Chauvin. Regional Science and Urban Economics, 2021, vol. 91: 103713.
Work in Progress
Work in Progress
Firm-Level Effects of Wealth Taxation: Evidence from Colombia
Abstract: Increasing wealth concentration has led to proposals of taxing wealth beyond individuals, i.e tax the net worth of corporations, however, there is little causal evidence on how firms respond to a tax on their net wealth. Unlike taxes on profits, a tax on net wealth raises the user cost of capital regardless of returns, and because its base is assets minus liabilities, it gives firms an incentive to adjust their balance sheets. I study Colombia’s corporate wealth tax, which applies to firms above a net wealth threshold, and exploit a 2006 reform that quadrupled the annual rate while keeping the threshold unchanged. Using financial statements of medium and large firms, I compare firms above and below the threshold in a difference-in-differences design. Preliminary results show that firms facing the higher rate reduce their investment, become more likely to sell capital assets and less likely to buy them, and bunch just below the threshold once the rate rises, but not when the rate was low. These results suggest that taxing firm wealth can discourage capital accumulation and distort reported wealth.
Real Effects of Corporate Income Tax Increases: Evidence from Portugal, With Jaime Leyva
Abstract: We test the assumption that a corporate tax cut has the same effect, with opposite sign, as a tax increase of similar size. Using the municipal corporate surtax in Portugal, which each municipality sets every year and which some municipalities raised and others cut between 2008 and 2023 and administrative balance-sheet data that cover nearly all non-financial firms in the country, we estimate staggered event-study designs separately for tax increases and decreases. Preliminary results suggest that firms do not respond symmetrically: tax increases reduce employment, capital, and the number of firms in the municipality, while tax cuts have limited effects, and average wages respond to neither. These results suggest that the direction of a tax change matters when evaluating the costs and benefits of fiscal reforms.
Pre-Doctoral Work
Pre-Doctoral Work
Human Capital Accumulation and Conditional Cash Transfers in Presence of Armed Conflict
Abstract: Armed conflict is one of the main barriers to development. Although there is a growing literature focusing on the effect of violent conflicts on human capital accumulation, there is less empirical evidence on whether or not social policies could help to mitigate the impact of violence on human capital. By addressing this issue using a sizeable conditional cash transfer in Latin America, I find that after three years of the implementation of the program, children living in high-conflict recipient municipalities have, on average, fewer years of education and lower enrollment rates. On top of that, only children in low-conflict zones benefit from the program. Displacement as a strategy for coping with the risk of violence by households receiving the program in conflict zones could be the reason why subsidy recipients have lower educational attainment.
The younger age profile of COVID-19 deaths in developing countries
With Annabelle Fowler and Juan Pablo Chauvin
Abstract: This paper examines why, during the first year of the COVID-19 pandemic, a larger share of COVID-19 deaths occurred among young and middle-aged adults in low- and middle-income countries (LMICs) than in high-income countries (HICs). Using novel data at the country, city, and patient levels, we obtain three main results. First, we show that the COVID-19 mortality age gap is not explained by younger susceptible populations in LMICs. Second, we provide indirect evidence that higher infection rates play a role, showing that variables linked to faster COVID-19 spread are correlated with younger mortality age profiles. Third, lower recovery rates in LMICs explain nearly all of the higher mortality among young adults and almost half of the higher mortality among middle-aged adults. Our evidence points to a higher prevalence of preexisting conditions associated with severe COVID-19, and lower access to hospitals and intensive care units in some countries as likely explanations.
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