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American Economic Journal: Economic Policy: Vol. 4 No. 3 (August 2012)

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Fiscal Spending Jobs Multipliers: Evidence from the 2009 American Recovery and Reinvestment Act

Article Citation

Wilson, Daniel J. 2012. "Fiscal Spending Jobs Multipliers: Evidence from the 2009 American Recovery and Reinvestment Act." American Economic Journal: Economic Policy, 4(3): 251-82.

DOI: 10.1257/pol.4.3.251

Abstract

This paper estimates the "jobs multiplier" of fiscal stimulus spending using the state-level allocations of federal stimulus funds from the American Recovery and Reinvestment Act (ARRA) of 2009. Because the level and timing of stimulus funds that a state receives was potentially endogenous, I exploit the fact that most of these funds were allocated according to exogenous formulary allocation factors such as the number of federal highway miles in a state or its youth share of population. Cross-state IV results indicate that ARRA spending in its first year yielded about eight jobs per million dollars spent, or $125,000 per job. (JEL E24, E62, H72, H75, R23)

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Authors

Wilson, Daniel J. (Federal Reserve Bank of San Francisco)

JEL Classifications

E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
E62: Fiscal Policy
H72: State and Local Budget and Expenditures
H75: State and Local Government: Health; Education; Welfare; Public Pensions
R23: Urban, Rural, Regional, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics

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