PhD thesis defence by Filipe Bento Caires
This thesis is composed of three essays examining how policy interventions in labor and procurement markets alter incentives and shape the responses of firms, workers, and public institutions.
Chapter 1 shows that the distributional effects of minimum wage hikes depend critically on firms’ compensation policies. I develop a model in which firms rely on either rigid job-based wage schedules or flexible individualized pay. Different pay structures imply distinct distributional adjustment patterns following a binding minimum wage. Using matched employer–employee data from Portugal and two minimum wage hikes, I find that spillovers are highly heterogeneous across pay systems: firms with rigid pay structures propagate the shock more strongly and farther up the wage distribution, whereas firms with flexible pay are better able to confine adjustments to directly affected workers. These findings identify pay practices as a key channel through which the minimum wage reshapes the wage distribution, with broader implications for how firms respond to any shock that shifts relative pay within firms.
Chapter 2 provides novel evidence that contract splitting - the act of splitting contracts into multiple smaller ones - is a central channel through which public buyers manipulate procurement procedures. Co-authored with Susana Peralta and Diogo Mendes, this chapter exploits a reform that lowered discretion thresholds in Portugal and detailed administrative procurement data from electronic registry. We find that buyers strategically divide contracts to avoid competitive requirements, and that contract splitting is the dominant form of manipulation particularly for goods and services. We discuss the implications of contract splitting for commonly used bunching estimators, documenting the existence of a splitting-induced bias, and provide evidence that discretion-seeking manipulation is motivated by favoritism rather than efficiency promotion.
Chapter 3, joint with Afonso Leme, studies how firms adjust to a contraction in teen labor supply. For identification, we exploit Portugal’s 2009 increase in the compulsory schooling age as a source of exogenous variation in teen labor supply. Leveraging matched employer-employee data, we find that the reform induced immediate and persistent declines in teen employment. Firms respond mainly by reducing on-the-job training and hiring slightly older workers, without upgrading skills or wages, indicating adjustment along a cost margin.
The event will take place in hybrid modality.
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