Stimulating Local Public Employment: Do General Grants Work?
AbstractThe effectiveness of public funds in increasing public employment has long been a question on public and labor economists’ minds. In most federal countries local governments employ large fractions of the working population, meaning that a tool for stimulating local public employment can substantially affect the overall unemployment level. This paper asks whether general grants to lower-level governments have the potential of doing so. Applying the regression kink design to the Swedish grant system, we are able to estimate causal effects of intergovernmental grants on personnel in different local government sectors. Our robust conclusion is that personnel in the central administration increased substantially after a marginal increase in grants, but that such an effect was lacking both for total personnel and personnel in child care, schools, elderly care, social welfare and in technical services. We suggest several potential reasons for these results, such as heterogeneous treatment effects and bureaucratic influence in the local decision-making process.
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Bibliographic InfoPaper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2010:9.
Length: 35 pages
Date of creation: 02 Sep 2010
Date of revision:
Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
More information through EDIRC
Fiscal federalism; intergovernmental grants; public employment; regression kink design; instrumental variables;
Other versions of this item:
- Lundqvist, Heléne & Dahlberg, Matz & Mörk, Eva, 2010. "Stimulating Local Public Employment: Do General Grants Work?," Working Paper Series, Center for Labor Studies 2010:14, Uppsala University, Department of Economics.
- Lundqvist, Heléne & Dahlberg, Matz & Mörk, Eva, 2010. "Stimulating Local Public Employment: Do General Grants Work?," IZA Discussion Papers 5177, Institute for the Study of Labor (IZA).
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-LAB-2010-09-11 (Labour Economics)
- NEP-PBE-2010-09-11 (Public Economics)
- NEP-URE-2010-09-11 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Dahlberg, Matz & Mörk, Eva & Rattso, Jorn & Ågren, Hanna, 2006. "Using a discontinuous grant rule to identify the effect of grants on local taxes and spending," Working Paper Series 2006:25, Uppsala University, Department of Economics.
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