Fiscal Policy and Occupational Employment Dynamics
Christian Bredemeier (),
Falko Juessen () and
Roland Winkler ()
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Christian Bredemeier: University of Cologne
Falko Juessen: University of Wuppertal
No 10466, IZA Discussion Papers from Institute for the Study of Labor (IZA)
We document substantial heterogeneity in occupational employment dynamics in response to government spending shocks. Employment rises most strongly in service, sales, and office ("pink-collar") occupations. By contrast, employment in blue-collar occupations is hardly affected by fiscal stimulus which is striking in light of its strong exposure to the cycle and its long-run decline due to technical change and globalization. We provide evidence that occupation-specific changes in labor demand are key to understand these findings and develop a business-cycle model that explains the heterogeneous occupational employment dynamics as a consequence of differences in the short-run substitutability between labor and capital services across occupations.
Keywords: fiscal policy; composition of employment; occupations; industries; heterogeneity (search for similar items in EconPapers)
JEL-codes: E62 E24 J21 J23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma and nep-mac
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