Cristiano C. Carvalho

Welcome to my website!

I am a PhD Candidate at the University of Michigan. My primary research interests are at the intersection of Public and Labor Economics. My research explores how government interventions shape and are shaped by labor market dynamics, with focus on the institutional challenges that developing countries face when designing effective tax and social insurance policies.

I am on the 2024-25 economics job market.

Email: crcarval@umich.edu

Publications

Unintended Consequences of Unemployment Insurance: Evidence from Stricter Eligibility Criteria in Brazil (joint with Raphael Corbi and Renata Narita)

Economics Letters (2018), Vol. 162, Pages 157-161. doi: https://doi.org/10.1016/j.econlet.2017.10.016

Abstract:

This paper investigates the impact of changes in the eligibility criteria of unemployment benefits (UI) on layoffs in Brazil. We exploit exogenous variation introduced by a reform in the UI system in 2015. Our difference-in-differences estimates show that UI accounts for 11–13% of the average dismissal rates of eligible workers. Our results are consistent with workers having the incentive to strategically induce their dismissals in order to collect UI benefits.

Working Papers

Size-Based Business Taxation in a High-Informality Context (Job Market Paper)

Abstract:

This paper provides evidence on the effects of size-based taxation in a context of low enforcement and a large informal sector. I examine the effect of a Brazilian tax reform that applied to micro-businesses below a revenue cutoff. For affected companies, the reform replaced all business taxes with a low, fixed monthly fee. Evidence indicates that the intervention increased the number of formal firms by 43%. Because so many informal firms transitioned to the formal sector, total tax revenues increased, despite the tax cut that the reform offered firms that were already in the formal sector. The paper’s model identifies sufficient statistics for welfare analysis of this type of reform, and its estimates suggest that the reform increased welfare, with compliance cost reduction—rather than tax reduction—being the primary driver of enrollment in the new regime.

Does Tax Transparency Affect Wage Setting? (joint with Trine Vattø)

Abstract:

Pay transparency has become a prominent topic in public discussions as a potential policy tool for promoting wage equity. We investigate the effects of an often-overlooked source of pay transparency: the public disclosure of tax information. In the fall of 2001, Norway made the tax returns of all its citizens available online, easily accessible through a simple search. This significant shift in public disclosure offers a unique opportunity to examine the effects of such transparency on wage compression and gender gaps. Our study utilizes this intervention to assess how increased pay transparency affects employees at various income levels within their firms and addresses gender wage disparities by using a difference-in-difference framework. Our central hypothesis is that pay transparency reduces labor market inequality by illuminating wage differences that workers perceive as unjustifiable. Our findings reveal that the 2001 intervention resulted in a 5.8% increase in relative wages for workers earning below the median among their peers, along with a 2.1% increase for female employees. Additionally, our analysis of worker mobility indicates that these wage increases for both groups are linked to a higher likelihood of leaving their firms, resulting in not only increased wages for those who stay but, more significantly, higher wages for those who switch employers, compared to what would be observed in a typical year.

Labor Inspections, Firms Adjustments and Employee Costs (joint with Ariza Gusti)

Abstract:

Labor inspection plays a crucial role in addressing the high prevalence of the informal sector and the low compliance with labor regulations in developing countries. However, while inspections can lead to an increase in labor costs, there is limited evidence regarding their effects on worker outcomes. In this study, we combine employer-employee matched data with establishment-level data on labor inspections in Brazil to estimate the impact of these inspections on worker earnings trajectories in the years following an inspection. Our findings indicate persistent, negative wage effects lasting up to four years after inspections. Workers in inspected establishments are also more likely to leave their jobs following an inspection. We find that these negative wage effects are driven both by firm stayers, consistent with within-firm adjustments, and firm-leavers, suggesting reallocation costs. The type of violations is important, with severance payment violations having a more significant negative impact than formalization violations. We examine potential channels to explain this difference and find that the firm’s cost pass-through, the amenities associated with the regulation, and the wage spillover effects resulting from the firm’s pay policies may play a role.

Work in Progress

Labor Enforcement, Schooling, and Child Labor (joint with Ariza Gusti)

The Local Labor Market Effects of Right-to-Work Laws: Evidence from Brazil (joint with Andrew Joung)

Page updated

Google Sites

Report abuse