UBC Theses and Dissertations

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UBC Theses and Dissertations

Essays in labor economics Jales, Hugo Borges


This thesis examines two topics in labor economics and policy evaluation. Chapter 1 provides an introduction. Chapter 2 addresses the estimation of the effects of the minimum wage on labor market outcomes in developing countries. The main finding is that, even in the absence of policy variation, that is, when the same level of the minimum wage holds for all the workers in the data, it is still possible to recover the effects of this policy under particular assumptions of a dual economy model. Using this result, the effects of the minimum wage in Brazil from 2001 to 2009 are estimated. It is shown that the minimum wage has considerably increased average wages and reduced wage inequality. However, these effects are accompanied by higher unemployment and an increase in the size of the informal sector. Overall, the loss of tax revenues from the outflow of workers to the informal sector and unemployment more than offsets the increase in wages. Thus, this minimum wage policy contributes to a decrease in the labor tax revenues collected by the government. Chapter 3 also considers estimation of the effects of the minimum wage on labor market outcomes in developing countries. However, this chapter explores the use of less restrictive assumptions regarding the joint distribution of sectors and wages. To ease the estimation of the model parameters, a parametric approach (maximum likelihood) is used. The results validate the conclusions obtained in the previous chapter. Chapter 4 investigates the estimation of policy effects in partially randomized designs. It is shown that when randomization is implemented in a stratified way, the usual tests of balance of characteristics between treatment and control groups can suffer from size distortions, lack of power, or both. A solution to this problem is proposed, and its performance is compared with the baseline estimators in a simulation. It is shown that the proposed test possesses the desirable characteristics of correct nominal size and consistency. Finally, to illustrate the use of these techniques, a stratified, randomized job training program is analyzed.

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