Analysing Job Creation Effects of Scaling Up Infrastructure Spending in South Africa
AbstractIn a first for South Africa, we draw on literature on infrastructure productivity to model dynamic economywide employment impacts of infrastructure investment funded with different fiscal tools. According to the South African investment plan, the policy will affect the stock of infrastructure as well as the stock of capital of some private and public sectors. Increased government deficit financed infrastructure spending improves GDP and reduces unemployment. However, in the long term, the policy reduces investment and it is not sustainable for South Africa to let its deficit grow unabated. Increased investment spending financed by tax increases has contrasting implications on unemployment. In the long run, unemployment decreases for all types of workers under one of the scenarios. In the short run, only elementary occupation workers benefit from a decrease in unemployment; for the rest, unemployment rises. Findings have immediate policy implications in various policy modelling areas.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 1310.
Date of creation: 2013
Date of revision:
Employment; dynamic CGE model; infrastructure scale up; externalities; South Africa;
Find related papers by JEL classification:
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other
This paper has been announced in the following NEP Reports:
- NEP-AFR-2013-06-04 (Africa)
- NEP-ALL-2013-06-04 (All new papers)
- NEP-PBE-2013-06-04 (Public Economics)
- NEP-TRE-2013-06-04 (Transport Economics)
- NEP-URE-2013-06-04 (Urban & Real Estate Economics)
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