The three essays of my dissertation focus on understanding the labor market and fiscal impacts of key government policies. The first essay, co-authored with Lihuen Nocetto, studies whether a cash assistance program in Uruguay creates a welfare trap. We provide new evidence on the possibility of such a trap exploiting the unique way in which the Uruguayan government re-targeted its main unconditional cash transfer program. With rich administrative longitudinal data and survey data, we provide separate causal estimates of the impact of entry into and of forced exit from the program based on regression discontinuity and dynamic differences-in-differences designs. We focus on three key outcomes: labor supply and formalization of work, human capital investments for children, and take-up of other safety-net programs. Overall, our results suggest that the program does not induce a welfare trap, and that long-term enrollment seems to be associated with strategic behaviors to sustain eligibility status, and not with decreased ability to leave social assistance.In the second essay, co-authored with Rafael Di Tella and Juan Dubra, we study the causal impact of trust in business elites and trust in government, on preferences for taxation at the top. Using a randomized online survey, and in contrast to previous work, we find that distrust causes an increase in desired taxes on the top 1%.The third essay focuses on estimating elasticities of taxable sales, profits, and assets with respect to their net-of-tax rates in Peru using bunching evidence at kinks and notches. We find that taxable sales elasticities are sizable at the lowest notch but monotonically decrease as we look at notches associated with higher levels of sales. We find elasticities of taxable profits in line with those found in other countries, and large elasticities of taxable assets. The latter suggests that the desirability of wealth taxes in developing contexts should be carefully studied.
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