The Employment Effects of Countercyclical Infrastructure Investments
66 Pages Posted: 2 May 2017 Last revised: 10 Nov 2017
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The Employment Effects of Countercyclical Infrastructure Investments
The Employment Effects of Countercyclical Infrastructure Investments
Date Written: November 10, 2017
Abstract
We estimate the causal impact of a sizable German infrastructure 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. We find that the program was effective, creating one job for one year for each €25’000 of investments. The employment gains reached their peak after nine months and dropped to zero quickly after the program’s completion. The reductions in unemployment amounted to two-thirds of the job creation, and employment grew predominately in the construction and non-tradable industries.
Keywords: Infrastructure Investments, Job Creation, Employment Dynamics, Countercyclical Fiscal Policy
JEL Classification: E24, E62, H72, J23
Suggested Citation: Suggested Citation