Jobs multipliers: evidence from a large fiscal stimulus in Spain
Mario Alloza and
No 1922, Working Papers from Banco de España
We estimate the employment effect of a large fiscal stimulus in Spain (PlanE), in which the national government transferred funds to municipalities to carry out local investment projects. Using a difference-in-difference approach by exploiting variation in the timing of the execution of projects across municipalities, we find that 100,000 euros of stimulus reduced unemployment by 0.62 jobs per year. We allow for possible spatial effects, i.e. the propagation of the stimulus to neighboring municipalities, and find that these are sizable, representing 8.4% of the “local” effect. We also present evidence on the transmission mechanism, finding that the effect was: (i) initially concentrated in the construction and industrial sectors, but later spilled over to the broader economy, (ii) larger for males than females, (iii) larger when the shock represented a higher share of the budget, and (iv) not larger for municipalities headed by more educated mayors. Our estimate of the multiplier falls in the lower range of previous work.
Keywords: fiscal policy; local fiscal multipliers; spillovers (search for similar items in EconPapers)
JEL-codes: E24 E62 H30 H72 (search for similar items in EconPapers)
Pages: 51 pages
New Economics Papers: this item is included in nep-eur, nep-lma, nep-mac and nep-ure
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Journal Article: Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1922
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