Job creation in tight and slack labor markets

Lukas Buchheim, Martin Watzinger and Matthias Wilhelm

Journal of Monetary Economics, 2020, vol. 114, issue C, 126-143

Abstract: Does investment create more jobs in slack than in tight labor markets? We study this question using data from a photovoltaic investment scheme. Comparing counties with high and low unemployment over time and across space, we find that € 100,000 of investment created 1.2 job-years in slack markets and fewer than 0.5 job-years in tight markets. This corresponds to labor earnings multipliers of 1.1 and below 0.5, respectively. These differences are not driven by changes in investment composition, capital-labor substitution, or regional migration. Consistent with crowding-out as a mechanism, investment leads to higher wage growth in tight than in slack markets.

Keywords: Local employment multiplier; State-dependent multiplier (search for similar items in EconPapers)
JEL-codes: E24 E62 J23 R23 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Job creation in tight and slack labor markets (2020)
Working Paper: Job Creation in Tight and Slack Labor Markets (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:114:y:2020:i:c:p:126-143

DOI: 10.1016/j.jmoneco.2019.02.006

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