The Employment Effects of Countercyclical Public Investments
Abstract
This paper estimates the causal impact of a sizable German public investment program on employment at the county level. The program focused on improving the energy efficiency of school buildings, making it possible to use the number of schools as an instrument for investments. It also enforced tight deadlines, reducing potential implementation lags. The program was cost-effective, creating, on average, one job for one year for an investment of €24,000. The employment gains are detectable after nine months and are accompanied by an unemployment reduction amounting to half of the job creation. Employment grew predominately in the directly affected industries.
Keywords
Public Investment; Jobs Multiplier; Sustainability
Cite as
Buchheim, L., & Watzinger, M. (2023). The Employment Effects of Countercyclical Public Investments. American Economic Journal: Economic Policy, 15(1), 154–173.Details
Publication type
Research article (journal)
Peer reviewed
Yes
Publication status
Published
Year
2023
Journal
American Economic Journal: Economic Policy
Volume
15
Issue
1
Start page
154
End page
173
Language
English
ISSN
1945-7731
DOI
Full text