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Regional Transfer Multipliers

Raphael Corbi, Elias Papaioannou () and Paolo Surico ()

No 13304, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A series of discontinuities in the allocation mechanism of federal transfers to municipal governments in Brazil allow us to identify the causal effect of public spending on local labor markets, using a 'fuzzy' Regression Discontinuity Design (RDD). Our estimates imply a cost per job of about 8,000 US dollars per year and a local income multiplier around two. The effect comes mostly from employment in services and is more pronounced among less financially developed municipalities.

Keywords: 'fuzzy' RD; employment; government spending; Natural Experiment; wages (search for similar items in EconPapers)
JEL-codes: C26 E62 H72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2018-11
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