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Employment Effects of Stimulus Investments

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  • Lukas Buchheim

    (University of Munich)

Abstract

We estimate the causal impact of countercyclical infrastructure investments on employment and unemployment from cross-county data. To this end, we exploit a particular feature of the sizable German infrastructure investment program enacted during the Great Recession. By law, 65 % of all stimulus funds were earmarked for investment in educational infrastructure with a special focus on the renovations of existing school buildings. The scope for stimulus investment at the local level was thus to a large part predetermined by the number of schools, opening up the possibility to use schools as an instrument for local investments. Our 2SLS estimates suggest costs for one job-year between 18'500 Euro and 35'500 Euro. The first jobs were created one year after the stimulus program was enacted. These costs per job-year are similar to estimates from evaluations of the US stimulus program.

Suggested Citation

  • Lukas Buchheim, 2015. "Employment Effects of Stimulus Investments," 2015 Meeting Papers 1455, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:1455
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    References listed on IDEAS

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