About

I'm an Economist with research interests spanning the fields of Public Finance, Public Economics, and Labour Economics.

You can find my curriculum vitae, here.

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Selected Research in Progress

• "The kinky response of corporate taxable income to dividend taxation"
with Pablo Gutiérrez Cubillos
      Abstract · Paper

We provide the first empirical estimates quantifying the relative distortionary effects of corporate and dividend taxes , finding that the ratio of firms' taxable income elasticities with respect to the net-of-tax rates on dividends and corporate income is 0.296. To interpret this estimate, we develop a theoretical model with bunching in which firms follow either the old or the new view of dividend taxation, such that the elasticity ratio identifies the share of bunching firms that behave according to the old view in the overlapping bunching region. For identification, we extend the classical bunching framework by allowing for multiple kinks at the same threshold, enabling us to estimate corporate taxable income elasticities with respect to both dividend and corporate tax rates. Our paper leverages a unique tax reform introduced in Canada in 2006, which targeted Canadian-controlled private corporations. This reform increased the integration between corporate and dividend taxes by allowing a larger share of corporate tax payments to be credited against dividend taxes, thereby reducing the effective dividend tax rate. Using our empirical estimates, we compare the efficiency gains from increasing dividend-tax integration to those from reducing the corporate tax rate. Our results suggest that, under the studied reform, reducing the corporate tax rate is more efficient, as reducing the dividend tax rate in one percentage point through increased tax integration recovers only one-quarter of the efficiency loss associated with corporate taxation.

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Publications

• "The two-sample two-stage least squares method to estimate the intergenerational earnings elasticity"
with Juan D. Díaz, Pablo Gutiérrez Cubillos, and Pablo A. Troncoso
The Journal of Economic Inequality, (2024)
      Abstract

We show that the inconsistency of the Two-Sample Two-Stage Least Squares (TSTSLS) Intergenerational Earnings Elasticity (IGE) estimator is a two-way prediction problem involving the replication of (i) the variance of unobserved parental earnings, and (ii) the endogeneity of unobserved parental earnings in the equation of children’s earnings. Concretely,we showthat the TSTSLS estimator asymptotically recovers the OLS IGE when the first-stage R-squared, i.e., the share of explained variance of parental earnings, equals the share of explained endogeneity of parental earnings in the child’s earnings equation. This condition leads to two notable outcomes with respect to previous findings in the literature: (i) perfect prediction of parental earnings is a specific instance of our condition, indicating that consistency can be attained even when parental earnings are predicted imperfectly and (ii) exogenous instruments alone are insufficient to guarantee asymptotic equivalence between TSTSLS and OLS IGE estimates. Furthermore, our condition suggests that strong first-stage instruments might amplify TSTSLS bias if they are also strongly endogenous in the child’s earnings equation. This last result provides a formal criterion for choosing first-stage predictors under the assumption that TSTSLS IGE estimates exhibit upward bias. Additionally, we theoretically study the biases of the two-sample stochastic multiple imputation and cell multiple imputation (MI) procedures, identifying conditions under which MI procedures outperform the traditional TSTSLS estimator. Finally, we validate our results through an empirical Monte Carlo exercise using administrative data from the Chilean formal private sector.

• "Intergenerational earnings mobility in Chile: the tale of the upper tail"
with Juan D. Díaz, Pablo Gutiérrez Cubillos, Pablo A. Troncoso, and Gabriel I. Villarroel
Empirical Economics, 67, 2411–2447, (2024)
      Abstract

This paper provides the first estimates of intergenerational earnings mobility in Chile using administrative data linking parents’ and children’s earnings from the formal private sector. We calculate mobility measures across the earnings distribution, revealing high mobility in the bottom 80% and 65% of the parents’ and children’s distribution, respectively. However, we observe significant persistence in the upper tail of the earnings distribution. Additionally, we identify notable gender heterogeneities in these mobility patterns. Specifically, the intergenerational mobility gender gap shows a nonlinear relationship with respect to parental earnings. Furthermore, we find that differences in mobility between the upper tail of the earnings distribution and the rest of the population are more pronounced for daughters than for sons. These findings suggest that the dynamics of gender-based mobility at the upper tail of the earnings distribution differ from those observed in the rest of the population.

• "Everything’s not lost: revisiting TSTSLS estimates of intergenerational mobility in developing countries"
with Juan D. Díaz, Pablo Gutiérrez Cubillos, and Pablo A. Troncoso
International Tax and Public Finance, 31, 66–94 (2024)
      Abstract

This paper revisits the Two-Sample Two-Stage Least Squares (TSTSLS) method, commonly used to estimate intergenerational mobility measures without linked parent-child earnings data. First, we study the TSTSLS intergenerational earnings elasticity (IGE) by decomposing it into the IGE estimated via OLS with linked parent-child earnings data, a projection bias, and a variance bias. We propose a parsimonious procedure, the doubly corrected TSTSLS (DC-TSTSLS), to i) eliminate the variance bias and ii) reduce the prediction bias. Our method provides a lower bound for the IGE estimate via OLS with linked earnings data. Second, we formally study the rank-rank correlation estimated through TSTSLS by decomposing the estimator into the rank-rank correlation estimated through OLS with linked data and a projection bias. We deliver analytical conditions for when this estimate is a lower-bound of the OLS rank-rank correlation estimated using linked data. Finally, we use parent-child linked administrative data from a developing country to test our lower-bound method through an empirical Monte Carlo approach, confirming its validity. Our doubly corrected IGE and rank-rank TSTSLS estimators are informative lower bounds of their respective OLS intergenerational mobility estimates computed using linked data. Our results suggest that the following practices should be implemented when the TSTSLS method is used to estimate intergenerational mobility measures: i) report the estimates of the rank-rank correlation computed through TSTSLS, and ii) implement our lower-bound methodology when facing data constraints, (i.e., only a few controls are available to impute parental earnings).

• "Intergenerational Earnings Persistence and the Provision of Public Goods: Evidence from Chile’s Constitutional Process"
with Juan D. Díaz, Pablo Gutiérrez Cubillos, and Pablo A. Troncoso
The Journal of Economic Inequality, 21, 47–81 (2023).
      Abstract

This paper studies the relationship between intergenerational economic persistence and preferences for the provision of public goods. Specifically, we develop a simple theoretical model in which a public good is financed through proportional taxation, and that predicts a lower provision of public goods given an increase in the intergenerational earnings elasticity (IGE), which is widely recognized as a measure of the degree of economic persistence from one generation to the next in society. We test this model empirically using the results of the 2020 Chilean national plebiscite, which asked about the replacement of the standing constitution by a new one that would potentially expand the role of the state in the provision of public goods. Our estimates suggest the existence of a positive association between the IGE and the share of the vote against a new constitution, even after controlling for median income and income inequality. These findings are consistent with our model and suggest that sectors of society that exhibit higher degrees of economic persistence also show greater reluctance towards redistributive policies that increase public goods provision.

• "Decentralizing the Chilean Miracle: Regional Intergenerational Mobility in a Developing Country"
with Juan D. Díaz, Pablo Gutiérrez Cubillos, Alexis Montecinos, Pablo A. Troncoso, and Gabriel I. Villarroel
Regional Studies, 57(5), 785-799 (2023).
      Abstract

We estimate spatially disaggregated measures of intergenerational mobility in Chile through an administrative dataset linking child’s and their parent’s earnings from the formal private labour sector. We report remarkable heterogeneity as we find higher and lower upward mobility in mining and agricultural regions, respectively, corroborating Connolly et al. (2019) with the distinction that Chile is a unitary form of government, implying that factors other than institutional differences shape mobility.