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The direct employment impact of public investment

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  • Moszoro Marian W.

    (International Monetary Fund, George Mason University, USA; SGH Warsaw School of Economics, Warsaw, Poland)

Abstract

We evaluate the direct employment effect of the public investment in key infrastructure ‒ electricity, roads, schools and hospitals, and water and sanitation. Using rich firm-level panel data from 41 countries over 19 years, we estimate that US$1 million of public spending on infrastructure creates 3–7 jobs in advanced economies, 10–17 jobs in emerging market economies, and 16–30 jobs in low-income developing countries. As a comparison, US$1 million in public spending on R&D yields 5–11 jobs in R&D in OECD countries. Green investment and investment with a larger R&D component deliver a higher employment effect. Overall, we estimate that 1% of global GDP in public investment can create more than seven million jobs worldwide through its direct employment effects alone.

Suggested Citation

  • Moszoro Marian W., 2024. "The direct employment impact of public investment," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 60(1), pages 59-74, March.
    • Handle: RePEc:vrs:ijomae:v:60:y:2024:i:1:p:59-74:n:1
    DOI: 10.2478/ijme-2023-0020
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    Cited by:

    1. Asuamah Yeboah, Samuel, 2024. "Bridging the Gap: Public-Private Partnerships in Sustainable Building for Developing Countries," MPRA Paper 122643, University Library of Munich, Germany, revised 10 Oct 2024.

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    More about this item

    Keywords

    COVID; employment; public investment; stimulus;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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