This study evaluates the impact of Chile’s innovative law on Food Labeling and Advertising, enacted in June 2016, on employment and real wages and profit margins for the food and beverage manufacturing sectors in the 2016–2019 period, using unique company-specific monthly data from Chile’s tax collection agency (measuring aggregate employment, real wages, average size of firms, and gross profit margins of the food and beverage manufacturing sector). Interrupted-time series analyses (ITSA) on administrative data from tax-paying firms was used and compared to synthetic control groups of sectors not affected by the regulations. ITSA results show no effect on aggregate employment nor on the average size of the firms, while they show negligible effects on real wages and gross margin of profits (as proportion of total sales), after the first two stages of the implementation (36 months), despite significant decreases in consumption in certain categories (sugar-sweetened beverages, breakfast cereals, etc.). Despite the large declines found in purchases of unhealthy foods, employment did not change and impacts on other economic outcomes were small. Though Chile’s law, is peculiar there is no reason to believe that if similar regulations were adopted elsewhere, they would have different results.

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A large body of work has highlighted the importance of employment reallocation as a driver of aggregate productivity growth, but there is little direct evidence on the extent of this process at the firm-worker level. We use an administrative matched employer-employee census for Chile to provide novel insights into the relationship between job transitions and productivity variation across firms, and to quantify the contribution of different worker groups to aggregate reallocation. As many theories would predict, worker flows from lower-to higher-productivity firms are larger than those of the opposite sign. Empirically, however, this is only marginally so. Almost half of all transitions occur "down the firm productivity ladder." This process is also highly heterogeneous along several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through non-employment, and among firms in the upper end of the productivity distribution. They are also much more likely for young, high-skilled workers, whose job transitions comprise in an accounting sense the lion's share of aggregate productivity change. Interestingly, workers with the highest job turnover rates contribute proportionally the least to aggregate productivity changes. Aggregate reallocation gains are therefore mostly explained by a relatively narrow subset of job transitions. Put together, this evidence implies that the productivity mechanics of job reallocation yield a net benefit, but this hides massive and heterogeneous gross flows underneath.

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