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Regional Transfer Multipliers

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  • Surico, Paolo
  • Corbi, Raphael
  • Papaioannou, Elias

Abstract

A series of discontinuities in the allocation mechanism of federal transfers to municipal governments in Brazil allow us to identify the causal effect of public spending on local labor markets, using a ‘fuzzy’ Regression Discontinuity Design (RDD). Our estimates imply a cost per job of about 8,000 US dollars per year and a local income multiplier around two. The effect comes mostly from employment in services and is more pronounced among less financially developed municipalities.

Suggested Citation

  • Surico, Paolo & Corbi, Raphael & Papaioannou, Elias, 2018. "Regional Transfer Multipliers," CEPR Discussion Papers 13304, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13304
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    More about this item

    Keywords

    Natural experiment; ‘fuzzy’ rd; Government spending; Employment; Wages;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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