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Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain

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  • Mario Alloza
  • Carlos Sanz

Abstract

We estimate the unemployment effects of a large fiscal stimulus in Spain (Plan Español para el Estímulo de la Economía y el Empleo, the Spanish Plan for the Stimulus of the Economy and Employment, commonly known as Plan E), in which the national government transferred funds to municipalities to carry out local investment projects. Using a difference‐in‐difference approach by exploiting variation in the timing of the execution of projects across municipalities, we find that 100,000 euros of stimulus reduced unemployment by 0.74 job‐years. We allow for possible spatial effects (i.e., the propagation of the stimulus to neighboring municipalities), and we find that these are sizable, representing 13.8 percent of the “local” effect. Our estimate of the multiplier falls in the lower range of previous work.

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  • Mario Alloza & Carlos Sanz, 2021. "Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 751-779, July.
    • Handle: RePEc:bla:scandj:v:123:y:2021:i:3:p:751-779
    DOI: 10.1111/sjoe.12428
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    Cited by:

    1. Alexis Habiyaremye & Olebogeng Molewa & Pelontle Lekomanyane, 2022. "Estimating Employment Gains of the Proposed Infrastructure Stimulus Plan in Post-Covid-19 South Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(1), pages 540-567, February.
    2. Priscila Espinosa & Daniel Aparicio-Pérez & Emili Tortosa-Ausina, 2023. "On the Impact of Next Generation EU Funds: A Regional Synthetic Control Method Approach," Working Papers 2023/07, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. Alloza, Mario & Sanz, Carlos & Gonzalo, Jesús, 2019. "Dynamic Effects of Persistent Shocks," UC3M Working papers. Economics 29187, Universidad Carlos III de Madrid. Departamento de Economía.
    4. Solé-Ollé, Albert & Viladecans-Marsal, Elisabet, 2019. "Housing booms and local spending," Journal of Urban Economics, Elsevier, vol. 113(C).
    5. Mario Alloza & Víctor González-Díez & Enrique Moral-Benito & Patrocinio Tello-Casas, 2021. "Access to services in rural Spain," Occasional Papers 2122, Banco de España.
    6. Mario Alloza & Víctor González-Díez & Enrique Moral-Benito & Patrocinio Tello-Casas, 2021. "El acceso a servicios en la España rural," Occasional Papers 2122, Banco de España.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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