Estéfano Rubio

Power Distribution and Efficiency: Theory and Evidence from Unionized Firms

[Link to paper] 

Abstract: Power is irrelevant for efficiency in a complete contract world. This paper studies how powerless groups, engaging in noncontractible coercive actions, affect the distribution and size of organizational surplus. I show that, by transferring bargaining power, powerful groups can mitigate coercive actions and enhance their welfare. I investigate this dynamic in union-management disputes, examining how an increase in labor unions' bargaining power affects firms' profits. This offers early causal evidence of power's efficiency effects in incomplete contract settings. Using administrative records from a Chilean labor code reform, I run an event study based on a quasi-random treatment assignment. It reveals that while profits were unaffected, remunerations of nonmanagerial workers increased, the number of hours worked did not fall, and unionization rates declined. Heterogeneous effects based on prepolicy bargaining power indicate that firms' profits are concave, while remunerations and unionization rates are convex, in unions' bargaining power. A Nash-bargaining model explains these findings, characterizing Pareto-efficient bargaining power distributions; demonstrating that management's welfare decreases with its bargaining power when the disputed surplus is sufficiently small; and showing that management generally prefers not to minimize the union's coercive actions. A model calibration indicates a union’s surplus share increase from 0.39 (prereform) to 0.48 (postreform) without harming profits.

Partisan Colleges and Political Donations

Submitted.  SSRN WP #4611160 (with Franco Calle)

[Link to paper]     [Link to SSRN]

Abstract: This paper provides evidence that educational institutions shape political ideologies and activism. Using population data from Chilean college applications and political donations from 2004 to 2021, we explore the causal impact of attendance of universities with different ideological leanings on political donations. Leveraging score-based discontinuities in Chile's centralized college application system as an instrumental variable, we find that attending left-leaning universities significantly impacts political donation behaviors. Specifically, our fuzzy RDD outcomes indicate that enrollment at left-leaning institutions bolsters political activism, elevating the likelihood of donating to any political party by 0.69 pp (a magnitude equivalent to 60% of the share of donations in the population) and 0.92 pp for compliers. This uptick predominantly stems from a surge of 0.48 pp in donations favoring left-wing campaigns (equivalent to 52% of all donations caused by attendance at a left-leaning college going to leftist campaigns, 18% going to the right, and 30% to the center). Eighty percent of the donations to leftist campaigns from alumni of left-leaning colleges are attributable to the causal effect of attending a left-leaning college. No significant effects are found for graduates of right-oriented colleges.

Long-term Effects of Partisan Colleges on Political Donations

(with Franco Calle)

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