Economic Stimulus at the Expense of Routine‐Task Jobs

Selale Tuzel and Miao Ben Zhang

Journal of Finance, 2021, vol. 76, issue 6, 3347-3399

Abstract: Do investment tax incentives improve job prospects for workers? We explore states' adoption of a major federal tax incentive that accelerates the depreciation of equipment investments for eligible firms but not for ineligible ones. Analyzing massive establishment‐level data sets on occupational employment and computer investment, we find that when states expand investment incentives, eligible firms immediately increase their equipment and skilled employees; whereas they reduce routine‐task employees after a delay of up to two years. These opposing effects constitute an overall insignificant effect on the firms' total employment and shed light on the nuances of job creation through investment incentives.

Date: 2021
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https://doi.org/10.1111/jofi.13080

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:76:y:2021:i:6:p:3347-3399

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