The direct employment impact of public investment
Affiliation:
1. International Monetary Fund, George Mason University, USA; SGH Warsaw School of Economics , Warsaw , Poland
Abstract
Abstract
We evaluate the direct employment effect of the public investment in key infrastructure ‒ electricity, roads, schools and hospitals, and water and sanitation. Using rich firm-level panel data from 41 countries over 19 years, we estimate that US$1 million of public spending on infrastructure creates 3–7 jobs in advanced economies, 10–17 jobs in emerging market economies, and 16–30 jobs in low-income developing countries. As a comparison, US$1 million in public spending on R&D yields 5–11 jobs in R&D in OECD countries. Green investment and investment with a larger R&D component deliver a higher employment effect. Overall, we estimate that 1% of global GDP in public investment can create more than seven million jobs worldwide through its direct employment effects alone.
Publisher
Walter de Gruyter GmbH
Reference47 articles.
1. Aizer, A., Eli, S., Lleras-Muney, A., Lee, K. (2020), Do youth employment programs work? Evidence from the new deal, NBER Working Paper 27103, National Bureau of Economic Research, Cambridge, MA. 2. Allan, J., Donovan, C., Ekins, P., Gambhir, A., Hepburn, C., Reay, D., Robins, N., Shuckburgh, E., Zenghelis, D. (2020), A net-zero emissions economic recovery from COVID-19, COP26 Universities Network. https://orca.cardiff.ac.uk/id/ eprint/132131 3. Alloza, M., Sanz, C. (2021), Jobs multipliers: evidence from a large fiscal stimulus in Spain, Scandinavian Journal of Economics, 123, 3, pp. 751-779, doi: 10.1111/sjoe.12428. 4. Auerbach, A.J., Gorodnichenko, Y. (2013), Output Spillovers from Fiscal Policy, American Economic Review, 103, 3,pp. 141-46. 5. Ball, R. and Beauvallet, M. (2013), Public sector employment and pay, Chapter 5, pp. 101-117, in: Z. Lonti (ed.), Government at a Glance 2013, OECD Publishing, Paris.
|
|