On February 25, 2026, the Shift Project gathered for the first monthly meeting of the spring 2026 semester to learn about Gonçalo Costa’s research on franchising, job quality, and labor standards compliance.
Guest Speaker: Gonçalo Costa is a Post-Doctoral Researcher at the Shift Project whose work sits at the intersection of urban, labor, and public economics, with a focus on market power and policies to address it. Before joining Shift, he was a PhD student at the CUNY Graduate Center and a Dissertation Scholar at the Washington Center for Equitable Growth. He will join the Economics Department at Sciences Po in Paris as a Marie Curie Fellow in fall 2026.
Presentation: “The Franchise Gap: Job Quality, New Policy, and Labor Standards Compliance.”
Firm sharing of rents with workers has dropped since the 1980s, contributing to an increase in income inequalities (Card et al ’13, Song et al ’19). One mechanism behind this reduction in rent-sharing has been the increased fissuring of labor relations: the breakdown of traditional employment relations has pushed lower-income workers into lower-income firms (Weil, 2014). Therefore, fissured workplaces tend to deliver worse job quality to workers. This result has been shown for outsourced workplaces – an important form of fissuring (Goldschmidt and Schmieder ’17), but less is known about job quality gaps by franchising status, another important form of fissuring. This paper documents how franchising systematically delivers worse job quality across wages and fringe benefits. Workers in franchised fast-food restaurants make, on average, 1.7 $/hr less than workers in non-franchised restaurants, and franchises have an overall job quality score 3/4 of a standard deviation lower than non-franchise companies. Using the staggered implementation of Paid Sick Leave policies, we show that these policies reduced the gap in access to paid sick leave by 26 percentage points. Despite this reduction, we also document rampant non-compliance: over 60% of workers in PSL jurisdictions in franchised establishments have their right to paid sick leave violated.
