Estéfano Rubio

My research has been generously supported by the following institutions:

Job Market Paper

Power Distribution and Efficiency: Theory and Evidence from Unionized Firms

[Link to paper] 

Abstract: Power is irrelevant for efficiency in a complete contract world, but when some actions are noncontractible it can affect both the size and distribution of surplus. This paper studies how powerless groups that engage in coercive, surplus-destroying actions affect organizational outcomes, and shows that transferring bargaining power toward them can mitigate coercion and enhance welfare. I investigate this mechanism in union–management disputes, examining how an increase in labor unions' bargaining power affects firms' profits and outcomes, thereby providing early causal evidence on power's efficiency effects in incomplete contract settings. Using administrative records from a 2017 reform of the Chilean labor code, I run an event study exploiting institutions that fix the timing of collective bargaining to obtain quasi-random assignment to the new versus the old regime across firms. The reform leaves profits statistically unchanged while increasing workers' remuneration, without reducing hours worked, and lowers unionization rates. Profit gains are concentrated where unions were initially weak, while wage and unionization responses are larger when unions start with more power, revealing a nonlinear response to unions' bargaining power. A bargaining model with coercion rationalizes these findings, characterizes surplus-maximizing distributions of bargaining power, and shows that management's welfare can fall as its own bargaining power rises when reduced coercion expands surplus. A calibration implies that the union's surplus share rises from 0.39 to 0.48 without harming profits.

Data Agreement: SII (Internal Revenue System from Chile), DT (Directorate of Labor from Chile), and CNEP (National Commission of Evaluation and Productivity).

Policy relevance: Identifies when shifting bargaining power toward weaker groups reduces coercive conflict and expands total surplus, informing the design of more inclusive institutions with balanced power. Evidence from Chile’s unionized firms illustrates both the gains and the limits of power redistribution as a tool for labor market reform.

Working Papers

Partisan Universities and Political Donations

Under Review.  (with Franco Calle)

[Link to paper]     [SSRN WP Nº 5797904]

Abstract: This paper provides causal evidence that educational institutions shape political behavior and partisan engagement. Using population data linking Chilean college applications to political donations (2004--2021), we exploit score-based discontinuities in the centralized admission system to estimate the effect of attending universities with different ideological orientations. Enrollment at left-leaning universities raises the probability of donating to left-wing campaigns by 0.41 pp (equivalent to 40% of the baseline donation rate), with effects reaching 1.2 pp in public left-leaning universities and smaller but positive effects in private ones. High electoral exposure during college amplifies these left-leaning effects by an additional 35%, indicating that institutional influence is sensitive to political context. Attending a private right-leaning university reduces donations to the left by 0.44 pp, with no offsetting rise in right-wing donations. The results are stronger among earlier cohorts, indicating lasting effects of institutional exposure. Evidence by field of study shows no effect for left-leaning majors (social sciences excluding economics), whereas business/economics majors increase right-wing donations by 0.78 pp. The pattern is consistent with left-leaning engagement being associated with a public, collectivist institutional culture, while patterns on the right suggest mobilization through market-oriented curricula and associated professional networks.

Data Agreement: DEMRE (Department of Evaluation, Measurement, and Educational Registration), MINEDUC (Ministry of Education from Chile), SERVEL (Electoral Service).

Policy relevance: Shows how university environments shape partisan giving, informing debates on university governance, the political role of higher education institutions, and the risks of partisan capture.

Divide and Conquer: Bargaining Scope and the Distribution of Rents

(with José Miguel Pascual)

[Link to paper]     [SSRN WP Nº 5799043]

Abstract: This paper studies how legal firm boundaries that constrain the scope of collective bargaining affect wages, rent sharing, and productivity. We analyze a 2014 Chilean labor-code reform that prevented corporations from fragmenting their workforce into smaller legal entities, thereby expanding the potential size of bargaining units. Using population-wide matched employer–employee administrative data and a dynamic difference-in-differences design with same-industry controls, we find that average annual earnings rose by 4.7%, bottom-decile wages by 10%, and within-firm wage dispersion (standard deviation) by $520–$710 (USD), corresponding to 6–9% of its pre-reform level. Employment and firm profits did not change, while value added per worker increased. Effects are strongest in initially smaller businesses and in multi-establishment groups with co-located units, consistent with coordination-cost frictions. We develop an extensive-form model in which management chooses whether to fragment or consolidate its business, and payoffs are determined by subsequent bargaining with workers. Under consolidation, workers can form an encompassing union that worsens management’s outside option during a strike, while the firm internalizes cross-unit complementarities in production. The model predicts higher worker effort, wages, and wage dispersion under consolidation, matching our empirical results and rationalizing their heterogeneity. Overall, the analysis shows that expanding bargaining-unit scope can be efficiency-consistent: coordination gains offset rent reallocation, allowing efficiency and equity to coexist within firms.

Data Agreement: SII (Internal Revenue System from Chile) and CNEP (National Commission of Evaluation and Productivity).

Policy relevance: Informs regulation of firm boundaries and bargaining-unit scope to promote wage growth and within-firm equity while preserving productivity.

Work in Progress

Publications (Pre - Ph.D.)

Policy Papers — with media coverage