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Fiscal Policy and Occupational Employment Dynamics

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  • CHRISTIAN BREDEMEIER
  • FALKO JUESSEN
  • ROLAND WINKLER

Abstract

We document substantial heterogeneity in occupational employment dynamics in response to government spending shocks in the United States. Employment rises most strongly in service, sales, and office (“pink‐collar”) occupations. By contrast, employment in blue‐collar occupations is hardly affected by fiscal policy. We provide evidence that occupation‐specific changes in labor demand are key for understanding these findings. We develop a business‐cycle model that explains the heterogeneous occupational employment dynamics as a consequence of composition effects due to heterogeneous employment changes across industries and occupation‐specific within‐industry employment shifts due to differences in the short‐run substitutability between labor and capital services across occupations.

Suggested Citation

  • Christian Bredemeier & Falko Juessen & Roland Winkler, 2020. "Fiscal Policy and Occupational Employment Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(6), pages 1527-1563, September.
    • Handle: RePEc:wly:jmoncb:v:52:y:2020:i:6:p:1527-1563
    DOI: 10.1111/jmcb.12627
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    Cited by:

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    7. Wifag Adnan & Kerim Peren Arin & Aysegul Corakci & Nicola Spagnolo, 2022. "On the heterogeneous effects of tax policy on labor market outcomes," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 991-1036, January.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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