Does Fiscal Policy Reduce Unemployment? Evidence from Pork-Barrel Spending

9 Pages Posted: 8 Jun 2009

See all articles by Andrew Leigh

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

Christine Neill

Wilfrid Laurier University

Date Written: June 6, 2009

Abstract

Studies of the effect of government spending on unemployment are potentially confounded by reverse causality. To address the endogeneity problem, we exploit variation in a pork-barrel road-building program, and find that higher government expenditure on road-building substantially reduces local unemployment.

Keywords: fiscal policy, unemployment, partisanship

JEL Classification: E24, E62, H30, H54

Suggested Citation

Leigh, Andrew and Neill, Christine, Does Fiscal Policy Reduce Unemployment? Evidence from Pork-Barrel Spending (June 6, 2009). Available at SSRN: https://ssrn.com/abstract=1415445 or http://dx.doi.org/10.2139/ssrn.1415445

Andrew Leigh (Contact Author)

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

Christine Neill

Wilfrid Laurier University ( email )

Waterloo, Ontario N2L 3C5
Canada

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