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American Economic Journal: Economic Policy: Vol. 4 No. 3 (August 2012)
Does State Fiscal Relief during Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act
Article Citation
Chodorow-Reich, Gabriel,
Laura Feiveson,
Zachary Liscow, and
William Gui Woolston. 2012. "Does State Fiscal Relief during Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act."
American Economic Journal: Economic Policy,
4(3): 118-45.
DOI: 10.1257/pol.4.3.118
DOI: 10.1257/pol.4.3.118
Abstract
The American Recovery and Reinvestment Act (ARRA) of 2009 included $88 billion of aid to state governments administered through the Medicaid reimbursement process. We examine the effect of these transfers on states' employment. Because state fiscal relief outlays are endogenous to a state's economic environment, OLS results are
biased downward. We address this problem by using a state's prerecession
Medicaid spending level to instrument for ARRA state fiscal relief. In our preferred specification, a state's receipt of a marginal $100,000 in Medicaid outlays results in an additional 3.8 job-years, 3.2 of which are outside the government, health, and education sectors. (JEL H75, I18, I38, R23)
Article Full-Text Access
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Additional Materials
Download Data Set (3.17 MB) | Online Appendix (51.97 KB)
Authors
Chodorow-Reich, Gabriel (U CA, Berkeley)
Feiveson, Laura (MIT)
Liscow, Zachary (U CA, Berkeley)
Woolston, William Gui (Stanford U)
Feiveson, Laura (MIT)
Liscow, Zachary (U CA, Berkeley)
Woolston, William Gui (Stanford U)
JEL Classifications
H75: State and Local Government: Health; Education; Welfare; Public Pensions
I18: Health: Government Policy; Regulation; Public Health
I38: Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs
R23: Urban, Rural, Regional, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
I18: Health: Government Policy; Regulation; Public Health
I38: Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs
R23: Urban, Rural, Regional, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
