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Title: Putting America to Work, Where? Evidence on the Effectiveness of Infrastructure Construction as a Locally Targeted Employment Policy

Citation Type: Miscellaneous

Publication Year: 2018

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Abstract: Is infrastructure construction an effective way to boost employment in distressed local labor markets? I use new, geographically detailed data on highway construction funded by the American Recovery and Reinvestment Act to study the relationship between construction work and local employment growth. The method for allocating funds across space facilitates a plausible selection-on-observables strategy. I find that highway funding impacted construction employment at the county level: A dollar of additional Recovery Act spending on local construction increased local construction payrolls by thirty cents during the five years after the Act's passage. The magnitude of this effect matches the national labor share of construction revenues, suggesting that targeted spending did not crowd out other local construction. These effects are most pronounced among counties with smaller populations and smaller shares of residents that commute to outside counties for work. However, when testing for general equilibrium effects on local employment and payroll aggregates, I find effects close to zero with very wide confidence intervals across all specifications. Although the Recovery Act was a significant enough intervention to have a sizable impact on the construction sector in counties with low mobility, these findings suggest that the local variation in highway spending was too small relative to baseline regional volatility to detect a local employment "multiplier."

Url: https://scholar.harvard.edu/files/garin/files/ARRA2018.pdf

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Authors: Garin, Andrew

Publisher: Harvard University

Data Collections: IPUMS NHGIS

Topics: Labor Force and Occupational Structure

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