The Employment Effects of Countercyclical Infrastructure Investments

66 Pages Posted: 2 May 2017 Last revised: 10 Nov 2017

See all articles by Lukas Buchheim

Lukas Buchheim

Ludwig Maximilian University of Munich (LMU)

Martin Watzinger

Ludwig Maximilian University of Munich (LMU)

Multiple version iconThere are 2 versions of this paper

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

Buchheim, Lukas and Watzinger, Martin, The Employment Effects of Countercyclical Infrastructure Investments (November 10, 2017). Available at SSRN: https://ssrn.com/abstract=2928165 or http://dx.doi.org/10.2139/ssrn.2928165

Lukas Buchheim (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Martin Watzinger

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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