Economic Stimulus at the Expense of Routine-Task Jobs

69 Pages Posted: 20 Nov 2017 Last revised: 16 May 2019

See all articles by Selale Tuzel

Selale Tuzel

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Miao Ben Zhang

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Date Written: May 14, 2019

Abstract

Do investment tax incentives improve job prospects for workers? We explore states' adoption of a major federal tax incentive that accelerates the depreciation of equipment investments for eligible firms but not for ineligible ones. Analyzing massive establishment-level datasets on occupational employment and computer investment, we find that when states expand investment incentives, eligible firms immediately increase their equipment and skilled employees; however, they reduce their routine-task employees after a delay of up to two years. These opposing effects constitute an overall insignificant effect on the firms' total employment and shed light on the nuances of job creation through investment incentives.

Keywords: Routine-Biased Technological Change; Skill-Biased Technological Change; Investment Tax Incentives; Section 179; Small Businesses

JEL Classification: D21, D22, G31, H25, H32, J24, J82

Suggested Citation

Tuzel, Selale and Zhang, Miao Ben, Economic Stimulus at the Expense of Routine-Task Jobs (May 14, 2019). Available at SSRN: https://ssrn.com/abstract=3072733 or http://dx.doi.org/10.2139/ssrn.3072733

Selale Tuzel

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

Miao Ben Zhang (Contact Author)

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://www.MiaoBenZhang.com/

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