Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act, 4 AM. ECON. J.: ECON. POL. 118 (2012) (with Gabriel Chodorow-Reich, Laura Feiveson & William Gui Woolston).
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 pre recession 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 3.8job years, 3.2 of which are outside the government, health, and education sectors. (JEL H75, 118, 138, R23).
Date of Authorship for this Version
Liscow, Zachary, "Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act" (2012). Faculty Scholarship Series. 5021.