Stimulating Local Public Employment: Do General Grants Work?
The effectiveness of public funds in increasing public employment has long been a question on public and labor economists’ minds. In most federal countries local governments employ large fractions of the working population, meaning that a tool for stimulating local public employment can substantially affect the overall unemployment level. This paper asks whether general grants to lower-level governments have the potential of doing so. Applying the regression kink design to the Swedish grant system, we are able to estimate causal effects of intergovernmental grants on personnel in different local government sectors. Our robust conclusion is that personnel in the central administration increased substantially after a marginal increase in grants, but that such an effect was lacking both for total personnel and personnel in child care, schools, elderly care, social welfare and in technical services. We suggest several potential reasons for these results, such as heterogeneous treatment effects and bureaucratic influence in the local decision-making process.
|Date of creation:||02 Sep 2010|
|Date of revision:|
|Publication status:||Published as Lundqvist, Heléne, Matz Dahlberg and Eva Mörk, 'Stimulating Local Public Employment: Do General Grants Work?' in American Economic Journal: Economic Policy , 2014, pages 167-192.|
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- 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.
- Matz Dahlberg & Eva Mörk & Jørn Rattsø & Hanna Ågren, 2006. "Using a discontinuous grant rule to identify the effect of grants on local taxes and spending," Working Papers 2006-12, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
- Dahlberg, Matz & Mörk, Eva & Rattso, Jorn & Ågren, Hanna, 2006. "Using a discontinuous grant rule to identify the effect of grants on local taxes and spending," Working Paper Series 2006:25, Uppsala University, Department of Economics.
- Marianne Simonsen & Lars Skipper & Niels Skipper, 2010.
"Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design,"
Economics Working Papers
2010-03, School of Economics and Management, University of Aarhus.
- Simonsen, Marianne & Skipper, Lars & Skipper, Niels, 2010. "Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design," Working Papers 10-1, University of Aarhus, Aarhus School of Business, Department of Economics.
- Bergström, Pål & Dahlberg, Matz & Johansson, Eva, 1998. "Municipal labour demand," Working Paper Series 1998:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
- Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 199-217.
- Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
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