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Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act
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'...
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| Published in: | American economic journal. Economic policy 2012-08, Vol.4 (3), p.118-145 |
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| Main Authors: | , , , |
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| cites | cdi_FETCH-LOGICAL-c450t-d97ed307b16a6e8c8da6925c775788d74f7c1fba3594ecc005a41217dc9046833 |
| container_end_page | 145 |
| container_issue | 3 |
| container_start_page | 118 |
| container_title | American economic journal. Economic policy |
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| creator | Chodorow-Reich, Gabriel Feiveson, Laura Liscow, Zachary Woolston, William Gui |
| description | 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. |
| doi_str_mv | 10.1257/pol.4.3.118 |
| format | article |
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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.</abstract><pub>American Economic Association</pub><doi>10.1257/pol.4.3.118</doi><tpages>28</tpages><oa>free_for_read</oa></addata></record> |
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| identifier | ISSN: 1945-7731 |
| ispartof | American economic journal. Economic policy, 2012-08, Vol.4 (3), p.118-145 |
| issn | 1945-7731 1945-774X |
| language | eng |
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| source | JSTOR Archival Journals and Primary Sources Collection; EconLit with Full Text; Social Science Premium Collection; ABI/INFORM Global; Politics Collection; PAIS Index; Access via American Economic Association |
| subjects | American Recovery & Reinvestment Act 2009-US Economic conditions Economic models Economic policy Economic recessions Economic statistics Economic theory Education Employment Expenditures Federal budget Government Government spending Health care policy Local government Medicaid Outcome variables Recessions Reimbursement Social policy State budgets Studies Tax increases Unemployment United States federal budget |
| title | Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act |
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