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Fiscal Policy and Occupational Employment Dynamics

Listed author(s):
  • Bredemeier, Christian

    ()

    (University of Cologne)

  • Juessen, Falko

    ()

    (University of Wuppertal)

  • Winkler, Roland

    ()

    (TU Dortmund)

Registered author(s):

    We document substantial heterogeneity in occupational employment dynamics in response to government spending shocks. Employment rises most strongly in service, sales, and office ("pink-collar") occupations. By contrast, employment in blue-collar occupations is hardly affected by fiscal stimulus which is striking in light of its strong exposure to the cycle and its long-run decline due to technical change and globalization. We provide evidence that occupation-specific changes in labor demand are key to understand these findings and develop a business-cycle model that explains the heterogeneous occupational employment dynamics as a consequence of differences in the short-run substitutability between labor and capital services across occupations.

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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10466.

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    Length: 44 pages
    Date of creation: Jan 2017
    Handle: RePEc:iza:izadps:dp10466
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