THREE ESSAYS IN LABOR ECONOMICS
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This thesis comprises three chapters of independent research on topics of laboreconomics. In Chapter 1, I show that empirical findings point to a robust negative relationship between local employment concentration and wages. Despite the scarcity of merger challenges on the grounds of decreased labor market competition, economic theory, case law, and amassed evidence justify the incorporation of labor markets in the scope of antitrust’s scrutiny. This chapter provides a comprehensive review of the existing literature regarding the impact of mergers on employees and its relevance to antitrust policy. Additionally, it presents a summary of recommendations to antitrust agencies, drawing from the accumulated practice in the enforcement of product market competition. In Chapter 2, I use matched employer-employee records merged with corporate tax information from 2003 to 2017 to estimate labor market-wide effects of mergers and acquisitions in Brazil. Pairs of commuting zone and industry sector define labor markets. In the following year of a merger, the market size falls by 10.8%. The employment adjustment is concentrated in merging firms. For the firms not involved in M&As, I estimate a 1.07% decline in workers’ earnings and a positive, although not significant, increase in their size. Most mergers have a predicted impact of zero points in concentration, measured by the Herfindahl–Hirschman Index (HHI). In spillover firms, earnings decline similarly for mergers with high and low predicted changes in HHI. Contrary to the recent literature on market concentration in developed economies, I find no evidence of oligopsonistic behavior in Brazilian labor markets. Lastly, Chapter 3 estimates the public wage premium relative to the private sector in the Brazilian economy. I use a rich linked employer-employee administrative dataset to compute the premium over average wages and along the earnings distribution. Exploratory analysis suggests that the average worker in the two sectors varies with respect to observable attributes. The Oaxaca-Blinder decomposition shows that, beyond differences in characteristics, public sector workers from most government branches and levels enjoy a positive earnings premium related to the government’s specific wage structure. Introducing worker fixed effects removes most of the premium variation along the earnings distribution; the total gap, as well as its characteristics and coefficients components, “flatten out” when endogenous selection is considered. For a policymaker to close the portion of the gap between public and private wages stemming from the public sector’s specific wage structure, a horizontal public wage freeze can be used.
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Kim, Hyunseob