Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency

This paper shows that the frequency at which workers are paid affects the within-month patterns of both household expenditure and aggregate economic activity. To identify causal effects, I exploit two novel sources of exogenous variation in pay frequency in the US. First, using an as-good-as-random variation in the pay frequency of retired couples, I show that those who are paid more frequently have smoother expenditure paths. Second, I take advantage of crossstate variation in labor laws to compare patterns of economic activity in states in which the frequency with which wages are paid differs. I document that low pay frequencies lead to within-month business cycles when many workers are paid on the same dates, which in turn generates costly congestion in sectors with capacity constraints. These findings have important policy implications for contexts where firms and workers do not internalize such congestion externalities as this situation leads to market equilibria with suboptimally low pay frequencies and few paydays.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS

Pay Cycles: Individual and Aggregate Effects of Paycheck Frequency

This paper shows that the frequency at which workers are paid affects the within-month patterns of both household expenditure and aggregate economic activity. To identify causal effects, I exploit two novel sources of exogenous variation in pay frequency in the US. First, using an as-good-as-random variation in the pay frequency of retired couples, I show that those who are paid more frequently have smoother expenditure paths. Second, I take advantage of crossstate variation in labor laws to compare patterns of economic activity in states in which the frequency with which wages are paid differs. I document that low pay frequencies lead to within-month business cycles when many workers are paid on the same dates, which in turn generates costly congestion in sectors with capacity constraints. These findings have important policy implications for contexts where firms and workers do not internalize such congestion externalities as this situation leads to market equilibria with suboptimally low pay frequencies and few paydays.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS

Pay cycles: individual and aggregate effects of paycheck frequency

This paper shows that the frequency at which workers are paid affects the within-month patterns of both household expenditure and aggregate economic activity. To identify causal effects, I exploit two novel sources of exogenous variation in pay frequency in the US. First, using an as-good-as-random variation in the pay frequency of retired couples, I show that those who are paid more frequently have smoother expenditure paths. Second, I take advantage of crossstate variation in labor laws to compare patterns of economic activity in states in which the frequency with which wages are paid differs. I document that low pay frequencies lead to within-month business cycles when many workers are paid on the same dates, which in turn generates costly congestion in sectors with capacity constraints. These findings have important policy implications for contexts where firms and workers do not internalize such congestion externalities as this situation leads to market equilibria with suboptimally low pay frequencies and few paydays.Centro de Estudios Distributivos, Laborales y Sociale

Gender Gaps in Labor Informality: The Motherhood Effect

Recent work has quantified the large negative effects of motherhood on female labor market outcomes in Europe and the US. But these results may not apply to developing countries, where labor markets work differently and informality is widespread. In less developed countries, informal jobs, which typically include microenterprises and self-employment, offer more time flexibility but poorer social protection and lower labor earnings. These characteristics affect the availability of key inputs in the technology to raise children, and therefore may affect the interplay between parenthood and labor market outcomes. Through an event-study approach we estimate short and long-run labor market impacts of children in Chile, an OECD developing country with a relatively large informal sector. We find that the birth of the first child has strong and long lasting effects on labor market outcomes of Chilean mothers, while fathers remain unaffected. Becoming a mother implies a sharp decline in mothers' labor supply, both in the extensive and intensive margins, and in hourly wages. We also show that motherhood affects the occupational structure of employed mothers, as the share of jobs in the informal sector increases remarkably. In order to quantify what the motherhood effect would have been in the absence of an informal labor market, we build a quantitative model economy, that includes an informal sector which offers more flexible working hours at the expense of lower wages and weaker social protection, and a technology to produce child quality that combines time, material resources and the quality of social protection services. We perform a counterfactual experiment that indicates that the existence of the informal sector in Chile helps to reduce the drop in LFP after motherhood in about 35%. We conclude that mothers find in the informal sector the flexibility to cope with both family and labor responsibilities, although at the cost of resigning contributory social protection and reducing their labor market prospects.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS

Gender Gaps in Labor Informality: The Motherhood Effect

Recent work has quantified the large negative effects of motherhood on female labor market outcomes in Europe and the US. But these results may not apply to developing countries, where labor markets work differently and informality is widespread. In less developed countries, informal jobs, which typically include microenterprises and self-employment, offer more time flexibility but poorer social protection and lower labor earnings. These characteristics affect the availability of key inputs in the technology to raise children, and therefore may affect the interplay between parenthood and labor market outcomes. Through an event-study approach we estimate short and long-run labor market impacts of children in Chile, an OECD developing country with a relatively large informal sector. We find that the birth of the first child has strong and long lasting effects on labor market outcomes of Chilean mothers, while fathers remain unaffected. Becoming a mother implies a sharp decline in mothers' labor supply, both in the extensive and intensive margins, and in hourly wages. We also show that motherhood affects the occupational structure of employed mothers, as the share of jobs in the informal sector increases remarkably. In order to quantify what the motherhood effect would have been in the absence of an informal labor market, we build a quantitative model economy, that includes an informal sector which offers more flexible working hours at the expense of lower wages and weaker social protection, and a technology to produce child quality that combines time, material resources and the quality of social protection services. We perform a counterfactual experiment that indicates that the existence of the informal sector in Chile helps to reduce the drop in LFP after motherhood in about 35%. We conclude that mothers find in the informal sector the flexibility to cope with both family and labor responsibilities, although at the cost of resigning contributory social protection and reducing their labor market prospects.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS

COVID-19 Lockdown and Domestic Violence: Evidence from Internet-Search Behavior in 11 Countries

We study the impact of the COVID-19 pandemic on domestic violence in 11 countries with different ex-ante incidence of domestic violence (DV) and lockdown intensity. We use a novel measure of DV incidents that allows us to make cross-country comparisons: a Google search intensity index of DV-related topics. Our difference-indifference estimates show an increase in DV search intensity after lockdown (31%), with larger effects as more people stayed at home (measured with Google Mobility Data). The peak of the increase in DV appears, on average, 7 weeks after the introduction of the lockdown. While we observe that the positive impacts on DV is a widespread phenomenon, the effect in developed countries is more than twice as strong as in Latin American countries. We show that the difference in impact correlates with the intensity of compliance with stay-at-home measures in the two groups.Centro de Estudios Distributivos, Laborales y Sociale

Poor Little Children: The Socio economic Gap in Parental Responses to School Disadvantage

In this paper, we study how parents react to a widely-used school policy that puts some children at a learning disadvantage. Specifically, we first document that, in line with findings in other countries, younger children in Spain perform signif- icantly worse at school than their older peers and - key to causal interpretation - that for children born in winter this effect is not due to birth seasonality. Fur- thermore, the age of school entry effect is significantly greater among children from disadvantaged families. To understand why, we analyze detailed data on parental investment and find that college-educated parents increase their time investment and choose schools with better inputs when their children are the youngest at school entry, while non-college-educated parents do not.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS

The Effect of Working Hours on Health

Does working time affect workers' health behavior and health? We study this question in the context of a French reform that reduced the standard workweek from 39 to 35 hours, at constant earnings. Our empirical analysis exploits arguably exogenous variation in the reduction of working time across employers due to the reform. We find that the shorter workweek reduced smoking by six percentage points, corresponding to 16% of the baseline mean. The reform also appears to have lowered BMI and increased self-reported health, but these effects are imprecisely estimated in the overall sample. A heterogeneity analysis provides suggestive evidence that while the impact on smoking was concentrated among blue-collar workers, body mass index decreased only among white-collar workers. These results suggest that policies which reduce working time could potentially lead to important health benefits.Facultad de Ciencias Económica

Gender Gaps in Labor Informality: The Motherhood Effect

Recent work has quantified the large negative effects of motherhood on female labor market outcomes in Europe and the US. But these results may not apply to developing countries, where labor markets work differently and informality is widespread. In less developed countries, informal jobs, which typically include microenterprises and self-employment, offer more time flexibility but poorer social protection and lower labor earnings. These characteristics affect the availability of key inputs in the technology to raise children, and therefore may affect the interplay between parenthood and labor market outcomes. Through an event-study approach we estimate short and long-run labor market impacts of children in Chile, an OECD developing country with a relatively large informal sector. We find that the birth of the first child has strong and long lasting effects on labor market outcomes of Chilean mothers, while fathers remain unaffected. Becoming a mother implies a sharp decline in mothers' labor supply, both in the extensive and intensive margins, and in hourly wages. We also show that motherhood affects the occupational structure of employed mothers, as the share of jobs in the informal sector increases remarkably. In order to quantify what the motherhood effect would have been in the absence of an informal labor market, we build a quantitative model economy, that includes an informal sector which offers more flexible working hours at the expense of lower wages and weaker social protection, and a technology to produce child quality that combines time, material resources and the quality of social protection services. We perform a counterfactual experiment that indicates that the existence of the informal sector in Chile helps to reduce the drop in LFP after motherhood in about 35%. We conclude that mothers find in the informal sector the flexibility to cope with both family and labor responsibilities, although at the cost of resigning contributory social protection and reducing their labor market prospects.Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS