The Direct Employment Impact of Public Investment

The Direct Employment Impact of Public Investment
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Volume/Issue: Volume 2021 Issue 131
Publication date: May 2021
ISBN: 9781513573793
$18.00
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Topics covered in this book

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Labor , Economics- Macroeconomics , Public Finance , Economics / General , employment effect , job content , employment impact , job elasticity , job intensity , construction employment , job multiplier , Public investment spending , Employment , Job creation , Income , Global

Summary

We evaluate the direct employment effect of the public investment in key infrastructure—electricity, roads, schools and hospitals, and water and sanitation. Using rich firm-level panel data from 41 countries over 19 years, we estimate that US$1 million of public spending in infrastructure create 3–7 jobs in advanced economies, 10–17 jobs in emerging market economies, and 16–30 jobs in low-income developing countries. As a comparison, US$1 million public spending on R&D yields 5–11 jobs in R&D in OECD countries. Green investment and investment with a larger R&D component deliver higher employment effect. Overall, we estimate that one percent of global GDP in public investment can create more than seven million jobs worldwide through its direct employment effects alone.