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American Economic Journal: Economic Policy: Vol. 6 No. 1 (February 2014)

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Stimulating Local Public Employment: Do General Grants Work?

Article Citation

Lundqvist, Heléne, Matz Dahlberg, and Eva Mörk. 2014. "Stimulating Local Public Employment: Do General Grants Work?" American Economic Journal: Economic Policy, 6(1): 167-92.

DOI: 10.1257/pol.6.1.167

Abstract

We apply the regression kink design to the Swedish grant system and estimate causal effects of intergovernmental grants on local public employment. Our robust conclusion is that grants do not stimulate local public employment. We find no statistically significant effects on total local public employment, and we can exclude even moderate effects. When disaggregating the total effect by sector, we find that personnel in the traditional welfare sectors are unaffected, a conclusion which applies to both publicly and privately employed in these sectors. The only positive and statistically significant effect of grants is that on administrative personnel.

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Online Appendix (215.58 KB) | Download Data Set (868.62 KB) | Author Disclosure Statement(s) (127.16 KB)

Authors

Lundqvist, Heléne (Stockholm U and CESifo, Munich)
Dahlberg, Matz (Uppsala U and CESifo, Munich)
Mörk, Eva (Uppsala U and CESifo, Munich)

JEL Classifications

H75: State and Local Government: Health; Education; Welfare; Public Pensions
H77: Intergovernmental Relations; Federalism; Secession
J45: Public Sector Labor Markets

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