Browsing by Author "Tessada, José"

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    Powering Up productivity: the effects of electrification on U.S. manufacturing
    Fiszbein, Martin ; Lafortune, Jeanne; Lewis, Ethan G.; Tessada, José
    We use 1890-1940 sector-county level data to identify the impact of electricity on manufacturing industries, exploiting pre-electrification variation in energy intensity across industries combined with variation across locations in proximity to early hydroelectric power plants. We find that labor productivity gains from electricity were rapid and long-lasting, in contrast with established narratives. Electrification was quickly accompanied by capital deepening and organizational changes that may have contributed to these gains. Impacts varied with market structure: productivity increased without expanding employment in sector-county cells with large initial firm size, while, in contrast, both output and employment increased in cells with small initial firm size.
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    Resource Misallocation from Childcare Policies
    Escobar, Diego ; Lafortune, Jeanne; Rubini, Loris; Tessada, José
    Childcare subsidies often attempt to allow low income families to work, but a problem arises when they generate unforeseen negative general equilibrium consequences. This paper focuses on a law in Chile that forces firms with more than 19 female workers to pay for childcare. We evaluate its effects through a model that features firm and household heterogeneity. Firms differ in productivity, and households in age, marital status, gender, skills, and number of children. In the model, the policy mis-allocates resources, driving firms to stop hiring females once they are close to the threshold. It also selects females with more skills into jobs that pay for childcare, leaving unskilled mothers un-subsidized. We calibrate the model and analyze the effects of this policy via counterfactual. The policy reduces both male and female wages by between 1.5% and 2.1%, and GDP per capita by 1.8%. Most of the change comes from mis-allocation, but some also from capital accumulation, that drops by 1.7%. The policy makes every household worse off, but the largest losers are low income mothers, precisely the group targeted by the policy, who lose up to 2% of consumption equivalent units each period. We evaluate two alternative policies: one currently being considered by the Chilean government that finances childcare through a labor tax and one where all firms must pay for childcare irrespective of size. Only the latter has sizable positive effects, suggesting that a better way to help cover childcare costs would be to extend the mandate to all firms.