Essays in Applied Microeconomics

This thesis has three chapters, all of which investigate applied microeconomics questions using causal inference tools. In the first paper, authored by me alone, I investigate the largest anti-corruption campaign ever undertaken in Brazil--Operation Car Wash (OCW)--to measure the effects of anti-corruption initiatives on public procurement corruption and labor markets. My findings suggest that the OCW effectively decreased public procurement corruption, increasing bidding competitiveness and transparency, but these gains came with high economic costs. The operation led to lower employment, higher firm closure rates, and firm downsizing. Young workers and those with prior links to the informal labor market were disproportionately affected, and large firms were more likely to close and downsize. This paper offers important insights to policymakers regarding the efficacy of anti-corruption campaigns and the unintended labor market effects of the corruption fight. The second chapter is co-authored with Erik Hembre and published in the Regional Science and Urban Economics journal. To uncover the effects of the Tax Cut and Jobs Act (TCJA) on homeownership and mortgage decisions, we use a simulated policy instrument that exploits state tax policy and housing market differentials. Our design compares households that are similar in observable characteristics but vary in state exposure to the TCJA. We find that each percentage point decline in the effective homeownership subsidy rate lowered homeownership rates by 0.57 percentage points and mortgage use by 0.70 percentage points after the TCJA was enacted. In the third chapter, co-authored with Jacob Robbins, we investigate the impact of Covid-19 shutdown and reopening policies on American consumer spending. Using high-frequency real-time spending data, we find that reopening policies substantially increased spending for categories directly impacted by the policies--for example, a 63.5 percentage point increase in nonessential in-store spending and a 13.9 percentage point increase in full-service indoor dining spending. For sectors not directly impacted--essential retail, limited-service restaurants, and online commerce--we find a limited impact of reopenings on spending. Overall, reopenings had large macroeconomic consequences, with retail reopenings responsible for 27.3% of the total trough-to-peak recovery in spending and restaurant reopenings responsible for 12.3% of the recovery.