Using granular payroll data on 22 million federal employees, we study how regulators respond to revolving door incentives: the option to obtain a job in the private sector. We document bunching of salaries just below a threshold that triggers post-government employment restrictions, indicating a deliberate effort to preserve private sector opportunities. Individuals just below the threshold are more likely to exit and become lobbyists. Agencies with significant bunching regulate high-paying industries, initiate fewer enforcement actions, and issue less costly rules, suggesting regulatory capture. Estimating a structural model, we show that eliminating the restriction will increase incentive distortion by 1.7%.

We study the effect of government-subsidized childcare on women’s career outcomes and firm performance using linked tax filing data. Exploiting a universal childcare reform in Quebec in 1997 and the variation in its timing relative to childbirth across cohorts of parents, we show that earlier access to childcare increases employment among new mothers, particularly among those previously unemployed. Earlier childcare access increases new mothers’ reallocation of careers across firms, leading to higher earnings and higher productivity. Firms traditionally unattractive to mothers with young children benefited from the reform, drawing more young female workers and experiencing better performance. Our results suggest that childcare frictions hamper women’s career progression and their allocation of human capital in the labor market.

Entrepreneurs with better diversified portfolios provide more insurance to employees against labor income risk: in a sample of over 524,000 Canadian firms and 858,000 owners, firms owned by more diversified entrepreneurs offer more stable jobs and earnings to employees when faced by idiosyncratic shocks. A one standard deviation increase in owner’s diversification reduces the shock’s pass-through rate to labor layoffs by 13% and to workers’ earnings by 41%. The data are consistent with such insurance being partly provided to retain valuable human capital and partly to avoid costly terminations. There is no evidence of insurance being priced in average wages.