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: SSRN] 

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 groups with little formal power that engage in coercion—noncontractible actions that shift the bargaining disagreement point in their favor while destroying surplus—and shows that transferring bargaining power toward them can crowd out coercion and enhance efficiency. I investigate this mechanism in union–management disputes, providing early causal evidence on power's efficiency effects in incomplete-contract settings. Using administrative data, including population-level tax records from a 2017 reform of the Chilean labor code, I run an event-study design 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 productivity and workers' remuneration without reducing employment, and reduces measures of conflict and unionization. Efficiency gains are concentrated where unions were initially weak, while wage and unionization responses are larger where unions start stronger—a nonlinear response to bargaining power. A bargaining model with coercion rationalizes these findings, characterizes surplus-maximizing power distributions, and shows that power can become a burden: management's welfare can fall as its own bargaining power rises when reduced coercion expands surplus. A calibration implies the union's surplus share rises from 0.39 to 0.48 without harming profits. More broadly, the results suggest that equality and efficiency need not trade off when contracts are incomplete.

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]

Abstract: Does the ideological orientation of universities shape their students' partisan engagement? We link the universe of Chilean college applications to the universe of political donations (2004-2021) and exploit score-based discontinuities in the centralized admission system to estimate the causal effect of enrolling in universities with different ideological leanings. Enrolling in a left-leaning university raises the probability of donating to left-wing campaigns by 0.41 percentage points, 40 percent of the baseline donation rate, with effects three times as large at public left-leaning universities and amplified by electoral exposure during college. The effects are asymmetric: private right-leaning universities do not mobilize right-wing donors but instead reduce donations to the left, while by field of study only business and economics majors increase right-wing donations, by 0.78 percentage points. Effects are strongest for the earliest cohorts, indicating durable rather than transitory exposure. The pattern points to a public, collectivist institutional culture on the left and to market-oriented curricula and professional networks on the right.

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 M. Pascual)

[Link to paper: SSRN]

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