Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain

51 Pages Posted: 28 Jun 2019 Last revised: 17 Jul 2019

Date Written: June 27, 2019

Abstract

We estimate the employment effect of a large fiscal stimulus in Spain (PlanE), in which the national government transferred funds to municipalities to carry out local investment projects. Using a difference-in-difference approach by exploiting variation in the timing of the execution of projects across municipalities, we find that 100,000 euros of stimulus reduced unemployment by 0.62 jobs per year. We allow for possible spatial effects, i.e. the propagation of the stimulus to neighboring municipalities, and find that these are sizable, representing 8.4% of the “local” effect. We also present evidence on the transmission mechanism, finding that the effect was: (i) initially concentrated in the construction and industrial sectors, but later spilled over to the broader economy, (ii) larger for males than females, (iii) larger when the shock represented a higher share of the budget, and (iv) not larger for municipalities headed by more educated mayors. Our estimate of the multiplier falls in the lower range of previous work.

Keywords: fiscal policy, local fiscal multipliers, spillovers

JEL Classification: E24, E62, H30, H72

Suggested Citation

Alloza, Mario and Sanz, Carlos, Jobs Multipliers: Evidence from a Large Fiscal Stimulus in Spain (June 27, 2019). Banco de Espana Working Paper No. 1922 (2019), Available at SSRN: https://ssrn.com/abstract=3411027 or http://dx.doi.org/10.2139/ssrn.3411027

Mario Alloza (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Carlos Sanz

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
19
Abstract Views
289
PlumX Metrics