Jobs multipliers: evidence from a large fiscal stimulus in Spain. … · 2019-06-05 · JOBS...

JOBS MULTIPLIERS: EVIDENCE FROM A LARGE FISCAL STIMULUS IN SPAIN

Mario Alloza and Carlos Sanz

Documentos de Trabajo N.º 1922

2019

JOBS MULTIPLIERS: EVIDENCE FROM A LARGE FISCAL STIMULUS IN SPAIN

JOBS MULTIPLIERS: EVIDENCE FROM A LARGE FISCAL

STIMULUS IN SPAIN (*)

Mario Alloza and Carlos Sanz

BANCO DE ESPAÑA

Documentos de Trabajo. N.º 1922

2019

(*) We thank Henrique Basso, Jesús Fernández-Villaverde, Enrique Moral-Benito, Omar Rachedi, Roberto Ramos, Tano Santos, Jan Stuhler, Javier Vallés, Ernesto Villanueva, and seminar participants at the Banco de España for helpful comments. The views expressed in this paper are those of the authors and do not necessarily coincide with the views of the Banco de España or the Eurosystem. Alloza: Banco de España, Calle Alcalá 48, 28014 Madrid (Spain), [email protected]. Sanz: Banco de España, Calle Alcalá 48, 28014 Madrid (Spain), [email protected].

The Working Paper Series seeks to disseminate original research in economics and fi nance. All papers have been anonymously refereed. By publishing these papers, the Banco de España aims to contribute to economic analysis and, in particular, to knowledge of the Spanish economy and its international environment.

The opinions and analyses in the Working Paper Series are the responsibility of the authors and, therefore, do not necessarily coincide with those of the Banco de España or the Eurosystem.

The Banco de España disseminates its main reports and most of its publications via the Internet at the following website: http://www.bde.es.

Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged.

© BANCO DE ESPAÑA, Madrid, 2019

ISSN: 1579-8666 (on line)

Abstract

We estimate the employment effect of a large fi scal 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 fi nd 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 fi nd that these are sizable, representing

8.4% of the “local” effect. We also present evidence on the transmission mechanism, fi nding

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: fi scal policy, local fi scal multipliers, spillovers.

JEL classifi cation: E24, E62, H30, H72.

Resumen

En este trabajo, estimamos los efectos en el empleo de un gran estímulo fi scal en España

(conocido como «Plan E»), por el cual el Gobierno central transfi rió fondos a los municipios

para llevar a cabo proyectos de inversión. Explotando la variación temporal en la ejecución de

los proyectos en los distintos municipios mediante un análisis de diferencias en diferencias,

encontramos que 100.000 euros de estímulo redujeron el desempleo en 0,62 empleos-año.

Consideramos la posibilidad de que existan efectos espaciales, esto es, la propagación

del estímulo a municipios vecinos, y encontramos que son considerables: suponen un

8,4 % del efecto «local». También presentamos evidencia sobre la transmisión del estímulo, y

vemos que el efecto: i) estuvo inicialmente concentrado en la construcción y en la industria,

pero se extendió luego al resto de la economía; ii) fue mayor para los hombres que para

las mujeres; iii) fue mayor cuando el estímulo fue más grande en proporción al presupuesto

municipal, y iv) no fue mayor en municipios con alcaldes de un mayor nivel educativo.

Nuestra estimación del multiplicador se encuentra en el rango inferior de lo hallado por

estudios anteriores.

Palabras clave: política fi scal, multiplicadores fi scales locales, efectos de desbordamiento.

Códigos JEL: E24, E62, H30, H72.

BANCO DE ESPAÑA 7 DOCUMENTO DE TRABAJO N.º 1922

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Unidad de Servicios AuxiliaresAlcalá, 48 - 28014 Madrid

E-mail: [email protected]

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