Research
Work in Progress
“Short-time work and its effect on employment and firm survival: evidence from the Great Recession in Belgium” with Bart Cockx and Gert Bijnens. [Abstract]
Abstract: This paper examines the effectiveness of Short-time work (STW) programs during the Great Recession in Belgium, the country with the highest uptake in Europe. While earlier studies have evaluated similar programs in other European countries during the same period, conclusions have varied based on the characteristics of treated firms and the persistence of economic shocks. Our study contributes to understanding the determinants of these findings. Leveraging novel administrative micro-aggregated data on program usage and exploiting exogenous variations in STW take-up through an institutional feature, we find, in line with existing literature, that STW effectively preserved jobs and increased working hours, at least one year after the crisis onset in Belgium. This positive impact aligns with the observed positive effect on firm survival also one year after the initial aggregate shock. Despite the persistent positive effect on employment in subsequent periods, this is not statistically significant for the average firm. Future analyses aim to identify the firms that benefited the most from the policy and assess the persistence of these effects over time.
“Hiring subsidies and temporary work agencies”
with Sam Desiere and Giulia Tarullo. [Abstract]
Abstract: This paper evaluates a hiring subsidy for lower-educated youth in Flanders (Belgium) that reduced labour costs by 10% to 15% for a period of two years. The hiring subsidy did not improve the job finding rate of eligible job seekers. We offer a novel explanation for this null finding. We first document that temporary work agencies obtained about 25% to 34% of the subsidies, and hired almost 40% of the subsidised job seekers. We then show that agencies did not respond to the policy by increasing the wages of subsidised workers. Remarkably, despite a 2.8% labour cost reduction, agencies employed 8% fewer eligible individuals after the reform. Our findings highlight the role of temporary work agencies in shaping the effectiveness of active labour market policies targeted at disadvantaged groups.
“Shiftwork in Europe: Ten facts”
with Sam Desiere. [Long abstract]
“Firm outcomes adjustment in response to changes in the corporate income tax rate in Developing Countries: Evidence from Ecuador 2013 - 2019”
Master Thesis supervisor: William Pariente . [Abstract]
Abstract: The low tax capacity is an important issue in many developing and emerging countries. Most governments have tackled this issue by implementing fiscal reforms that comprise changes in tax rates, improvements in administrative enforcement or even both at the same time. I use a quasi experimental setting created as a result of a fiscal reform in Ecuador in late 2014. Using a panel of administrative data from firms financial statements during the period 2013-2018, I exploit the variation created by the reform that consisted in an increase from 22% to 25% - in 2015 - and to 28% - in 2018 - on the statutory corporate income tax rate. Three types of responses are studied: 1) corporate size responses, 2) financing responses, 3) profit shifting responses and 4) changes in ownership structure after the reform. Even though there is a large literature that has been built around firms behavior to changes in corporate tax rates in developed countries, there is ambiguos and scarced evidence about the responses of firms to fiscal reforms in developing and emerging countries.
Working Papers
“Theory and Empirics of Short-Time Work: A Review”
with Muriel Dejemeppe and Giulia Tarullo. [WP]
Abstract: Following massive take-up rates during the COVID-19 period, short-time work (STW) policies have attracted renewed interest. In this paper, we take stock of this policy instrument and provide a critical review of STW systems in Europe. We focus on the objectives of STW programs and their primary characteristics, as well as the inefficiencies associated with these policies, such as excessive use and slower worker reallocation. Additionally, we take a stroll through the main contributions of STW impact evaluations. Finally, we identify relevant directions for the refinement of the main design features of the scheme, key lessons, and avenues for future research.
“Taxable Income Elasticities in Developing Countries: Evidence From Ecuador”
with José G. Castillo García. [WP]
Abstract: Tax reforms involve welfare changes that need to be consistently measured. Pivotal parameter in such empirical efforts is the Elasticity of Taxable Income (ETI). This paper contributes to the estimation of the ETI in developing economies. We rely on a research design based on Ecuador's Reformatory Law of Tax Equity of 2007. By using personal income tax administrative records, we show that, on average, the ETI (net-of-MTR) of the aggregated gross income is around -0.23. Also, we find evidence of heterogeneous responses to tax policy shocks through changes in Marginal Tax Rates, conditional on income levels; a one percentage point increase in the MTR leads to an increase of 0.15 percentage points of the aggregated gross income in lower-income taxpayers, while for higher-income taxpayers we report a null effect. Results are robust to different specifications and adjustments proposed due to parallel changes in deduction policies.
Publications
with Segundo Camino. [ Article ] [Review of Development Economics]
Abstract: The construction sector is one of the most important sectors for economic development due, among other reasons, to the productive chains that it generates. This paper presents an analysis of the determinants of the total factor productivity (TFP) in the Ecuadorian construction sector during the period 2007–2018. In the first stage, we estimate a production function using the Wooldridge (Economics Letters, 2009, 104, 112–114) estimator to correct the simultaneous determination of inputs and firm unobserved productivity. In the second stage, we analyze the main determinants of TFP. These determinants are classified into four groups: internal, international trade, financial constraints, and external characteristics. Our results suggest that firm age is positively related with TFP but negatively related with TFP growth. Similarly, the fact of being a family firm is negatively related with TFP, but size is positively related with TFP and its growth across the construction subsectors. In addition, we find that access to debt and credit is positively related with productivity, but less-competitive environment is negatively related with productivity. Finally, our results suggest that TFP and its growth are pro-cyclical with respect to the gross domestic product. Our results have several managerial implications that are discussed in this article.
“Is FDI a potential tool for boosting firm’s performance? Firm level evidence from Ecuador”
with Segundo Camino and Mary Armijos. [ Article ] [Journal of Evolutionary Economics]
Abstract: In developing countries, the evidence regarding the direct and indirect effects of FDI on economic and financial performance at the firm level is mixed. To contribute to this literature, we provide empirical evidence of direct and indirect effects of FDI on firm’s performance, using return on assets (ROA), gross revenues and gross revenues growth rate as performance measures. We examine the private formal enterprise sector in Ecuador from 2007 to 2018. Our identification strategy relies on the use of the Generalized Method of Moments (GMM) methodology for dynamic panel data which allows us to control for potential endogeneity, autocorrelation and heteroskedasticity issues. The results suggest that firms with inward FDI grow faster than their counterparts, and firms with higher amounts of FDI as a share of total revenues have on average higher levels of gross revenues. Moreover, we find negative horizontal wages and gross revenues spillover effects on gross revenues growth rates, but positive horizontal gross revenues spillover effects on ROA. There is also significant evidence of negative horizontal spillover effects in all economic sectors, whereas evidence for forward and backward spillovers is heterogeneous across them.
“Determinants of profitability of life and non-life insurance companies: evidence from Ecuador”
with Segundo Camino. [ Article ] [International Journal of Emerging Markets]
Abstract: The purpose of this paper is is to identify the main determinants of insurance profitability on life and non-life segments to obtain which variables affect in each market of the Ecuadorian insurance sector. Using a large panel data set with financial information from 2001 to 2017 we estimate the determinants through a panel corrected standard errors regression. We find that net premiums, technical reserves, capital ratio and score efficiency are micro-determinants in the life insurance sector, whereas in the non-life sector, the micro-determinants include also claim levels and liquidity ratios; moreover, we find that HHI is a determinant of profitability only in the life insurance sector. Among the macro determinants set, we find that the interest rate has also a significant impact both in the life and non-life insurance segments.