The Employment Effects of Countercyclical Public Investments

Buchheim, Lukas; Watzinger, Martin


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



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