Fiscal Policy and Occupational Employment Dynamics

44 Pages Posted: 22 Jan 2017

See all articles by Christian Bredemeier

Christian Bredemeier

University of Dortmund - Ruhr Graduate School in Economics

Falko Juessen

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Roland Winkler

Dortmund University, Faculty of Business, Economics, and Social Sciences,

Date Written: January 2017

Abstract

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.

Keywords: fiscal policy, composition of employment, occupations, industries, heterogeneity

JEL Classification: E62, E24, J21, J23

Suggested Citation

Bredemeier, Christian and Juessen, Falko and Winkler, Roland, Fiscal Policy and Occupational Employment Dynamics (January 2017). IZA Discussion Paper No. 10466. Available at SSRN: https://ssrn.com/abstract=2903068

Christian Bredemeier (Contact Author)

University of Dortmund - Ruhr Graduate School in Economics ( email )

Hohenzollernstr. 1-3
Essen, NRW 45128
Germany

Falko Juessen

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Roland Winkler

Dortmund University, Faculty of Business, Economics, and Social Sciences, ( email )

United States

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