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Can national infrastructure spending reduce local unemployment? Evidence from an Australian roads program

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  • Leigh, Andrew
  • Neill, Christine

Abstract

We examine the effect of a federally-funded local infrastructure spending program on local unemployment rates. To address the likely funding endogeneity problem, we exploit variation in spending due to pork-barreling, and find that higher government expenditure on roads substantially reduces local unemployment.

Suggested Citation

  • Leigh, Andrew & Neill, Christine, 2011. "Can national infrastructure spending reduce local unemployment? Evidence from an Australian roads program," Economics Letters, Elsevier, vol. 113(2), pages 150-153.
    • Handle: RePEc:eee:ecolet:v:113:y:2011:i:2:p:150-153
    DOI: 10.1016/j.econlet.2011.05.037
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    References listed on IDEAS

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    1. Levitt, Steven D & Poterba, James M, 1999. "Congressional Distributive Politics and State Economic Performance," Public Choice, Springer, vol. 99(1-2), pages 185-216, April.
    2. Kevin Milligan & Michael Smart, 2005. "Regional Grants as Pork Barrel Politics," CESifo Working Paper Series 1453, CESifo.
    3. Andrew Leigh, 2008. "Bringing home the bacon: an empirical analysis of the extent and effects of pork-barreling in Australian politics," Public Choice, Springer, vol. 137(1), pages 279-299, October.
    4. Peter Kenyon, 1997. "Infrastructure Spending and Unemployment: Government Responsibility for Growth and Jobs," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 30(4), pages 421-432, December.
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    Cited by:

    1. Chen, Zhuo & He, Zhiguo & Liu, Chun, 2020. "The financing of local government in China: Stimulus loan wanes and shadow banking waxes," Journal of Financial Economics, Elsevier, vol. 137(1), pages 42-71.
    2. Sylvain Leduc & Daniel Wilson, 2013. "Roads to Prosperity or Bridges to Nowhere? Theory and Evidence on the Impact of Public Infrastructure Investment," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 89-142.
    3. Darrouzet-Nardi, Amelia & Masters, William, 2015. "Nutrition smoothing: Can access to towns and cities protect children against poor health conditions at birth?," 2015 Conference, August 9-14, 2015, Milan, Italy 211558, International Association of Agricultural Economists.
    4. Candra Fajri Ananda, 2017. "Does Government Quality Spending can reduce Poverty? A Case in East Java Province," GATR Journals gjbssr458, Global Academy of Training and Research (GATR) Enterprise.
    5. Piotr Ciżkowicz & Michał Kowalczuk & Andrzej Rzońca, 2016. "Heterogeneous determinants of local unemployment in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 28(4), pages 487-519, October.
    6. Thomas Habanabakize & Paul-Francois Muzindutsi, 2017. "Analysis of Government Expenditure and Sectoral Employment in the Post-apartheid South Africa: Application of ARDL Model," Journal of Economics and Behavioral Studies, AMH International, vol. 9(2), pages 224-233.
    7. Corey Young, 2023. "Employment and Income Effects of Investments Made Using the Act 13 Unconventional Natural Gas Impact Fee in Pennsylvania," Energies, MDPI, vol. 16(11), pages 1-11, May.
    8. Ales Franc & Sona Kukuckova & Marek Litzman, 2024. "Too far to go to work? Examining the effect of changes in the time taken to commute on regional unemployment," MENDELU Working Papers in Business and Economics 2024-94, Mendel University in Brno, Faculty of Business and Economics.
    9. Kang, Jihye & Kim, Soyoung, 2022. "Government spending news and surprise shocks: It’s the timing and persistence," Journal of Macroeconomics, Elsevier, vol. 73(C).
    10. Kanazawa, Nobuyuki, 2021. "Public investment multipliers: Evidence from stock returns of the road pavement industry in Japan," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    11. Monica Nagpal & Michael A. Kortt & Brian Dollery, 2013. "Bang for the Buck? An Evaluation of the Roads to Recovery Program," Economic Papers, The Economic Society of Australia, vol. 32(2), pages 239-248, June.
    12. Habanabakize Thomas & Muzindutsi Paul-Francois, 2018. "Analysis of the Keynesian Theory of Employment and Sectoral Job Creation: The Case of the South African Manufacturing Sector," Folia Oeconomica Stetinensia, Sciendo, vol. 18(1), pages 123-143, June.
    13. Sylvain Leduc & Daniel J. Wilson, 2012. "Should transportation spending be included in a stimulus program? a review of the literature," Working Paper Series 2012-15, Federal Reserve Bank of San Francisco.
    14. Appel Mahmud & Donghong Ding & Ataullah Kiani & Md. Morshadul Hasan, 2020. "Corporate Social Responsibility Programs and Community Perceptions of Societal Progress in Bangladesh: A Multimethod Approach," SAGE Open, , vol. 10(2), pages 21582440209, May.
    15. Alizadeh, Tooran & Farid, Reza, 2017. "Political economy of telecommunication infrastructure: An investigation of the National Broadband Network early rollout and pork barrel politics in Australia," Telecommunications Policy, Elsevier, vol. 41(4), pages 242-252.
    16. Paulo Reis Mourao, 2013. "Pork-Barrel versus Irrelevance Effects in Portuguese Public Spending," Environment and Planning C, , vol. 31(4), pages 649-666, August.
    17. Dan Chen & Pengcheng Xiang & Fuyuan Jia & Jian Zhang & Zhaowen Liu, 2020. "An Indicator System for Evaluating Operation and Maintenance Management of Mega Infrastructure Projects in China," IJERPH, MDPI, vol. 17(24), pages 1-23, December.
    18. Mahalia Jackman, 2014. "A Note on the Labor Market Effects of Remittances in Latin American and Caribbean Countries: Do Thresholds Exist?," The Developing Economies, Institute of Developing Economies, vol. 52(1), pages 52-67, March.

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    More about this item

    Keywords

    Fiscal policy; Unemployment; Partisanship;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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