Stimulating Local Public Employment: Do General Grants Work?

Heléne Lundqvist, Matz Dahlberg () and Eva Mörk ()

No 5177, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The effectiveness of public funds in increasing public employment has long been a question on public and labor economists’ minds. In most federal countries local governments employ large fractions of the working population, meaning that a tool for stimulating local public employment can substantially affect the overall unemployment level. This paper asks whether general grants to lower-level governments have the potential of doing so. Applying the regression kink design to the Swedish grant system, we are able to estimate causal effects of intergovernmental grants on personnel in different local government sectors. Our robust conclusion is that personnel in the central administration increased substantially after a marginal increase in grants, but that such an effect was lacking both for total personnel and personnel in child care, schools, elderly care, social welfare and in technical services. We suggest several potential reasons for these results, such as heterogeneous treatment effects and bureaucratic influence in the local decision-making process.

Keywords: regression kink design; public employment; intergovernmental grants; fiscal federalism; instrumental variables (search for similar items in EconPapers)
JEL-codes: C33 H11 H70 J45 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2010-09
New Economics Papers: this item is included in nep-eur, nep-lab, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: American Economic Journal: Economic Policy, 2014, 6 (1) 167 - 192

Downloads: (external link)
https://docs.iza.org/dp5177.pdf (application/pdf)

Related works:
Journal Article: Stimulating Local Public Employment: Do General Grants Work? (2014)
Working Paper: Stimulating Local Public Employment: Do General Grants Work? (2010)
Working Paper: Stimulating Local Public Employment: Do General Grants Work? (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp5177

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().