International Journal of Management and Economics (Mar 2024)

The direct employment impact of public investment

  • Moszoro Marian W.

DOI
https://doi.org/10.2478/ijme-2023-0020
Journal volume & issue
Vol. 60, no. 1
pp. 59 – 74

Abstract

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We evaluate the direct employment effect of the public investment in key infrastructure ‒ electricity, roads, schools and hospitals, and water and sanitation. Using rich firm-level panel data from 41 countries over 19 years, we estimate that US$1 million of public spending on infrastructure creates 3–7 jobs in advanced economies, 10–17 jobs in emerging market economies, and 16–30 jobs in low-income developing countries. As a comparison, US$1 million in public spending on R&D yields 5–11 jobs in R&D in OECD countries. Green investment and investment with a larger R&D component deliver a higher employment effect. Overall, we estimate that 1% of global GDP in public investment can create more than seven million jobs worldwide through its direct employment effects alone.

Keywords