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Stimulating Local Public Employment: Do General Grants Work?

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  • Heléne Lundqvist
  • Matz Dahlberg
  • Eva Mörk

Abstract

We apply the regression kink design to the Swedish grant system and estimate causal effects of intergovernmental grants on local public employment. Our robust conclusion is that grants do not stimulate local public employment. We find no statistically significant effects on total local public employment, and we can exclude even moderate effects. When disaggregating the total effect by sector, we find that personnel in the traditional welfare sectors are unaffected, a conclusion which applies to both publicly and privately employed in these sectors. The only positive and statistically significant effect of grants is that on administrative personnel.

Suggested Citation

  • Heléne Lundqvist & Matz Dahlberg & Eva Mörk, 2014. "Stimulating Local Public Employment: Do General Grants Work?," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 167-192, February.
    • Handle: RePEc:aea:aejpol:v:6:y:2014:i:1:p:167-92
    DOI: 10.1257/pol.6.1.167
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    1. Marianne Simonsen & Lars Skipper & Niels Skipper, 2016. "Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(2), pages 320-337, March.
    2. Dahlberg, Matz & Mörk, Eva & Rattsø, Jørn & Ågren, Hanna, 2008. "Using a discontinuous grant rule to identify the effect of grants on local taxes and spending," Journal of Public Economics, Elsevier, vol. 92(12), pages 2320-2335, December.
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    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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    1. Stimulating Local Public Employment: Do General Grants Work? (American Economic Journal: Economic Policy 2014) in ReplicationWiki

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