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Bringing Back the Jobs Lost to Covid‐19: The Role of Fiscal Policy

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  • CHRISTIAN BREDEMEIER
  • FALKO JUESSEN
  • ROLAND WINKLER

Abstract

Covid‐19 induced job losses occurred predominantly in industries with intensive worker–client interaction as well as in pink‐collar and blue‐collar occupations. We study the ability of fiscal policy to stabilize employment by occupation and industry during the Covid‐19 crisis. We use a multisector, multioccupation macro‐economic model and investigate different fiscal‐policy instruments that help the economy recover faster. We show that fiscal stimuli foster job growth for hard‐hit pink‐collar workers, whereas stimulating blue‐collar job creation is more challenging. Only a cut in labor income taxes generates a substantial number of blue‐collar jobs.

Suggested Citation

  • Christian Bredemeier & Falko Juessen & Roland Winkler, 2023. "Bringing Back the Jobs Lost to Covid‐19: The Role of Fiscal Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(7), pages 1703-1747, October.
  • Handle: RePEc:wly:jmoncb:v:55:y:2023:i:7:p:1703-1747
    DOI: 10.1111/jmcb.13005
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