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Title: Regional Transfer Multipliers

Author(s): Raphael Corbi, Elias Papaioannou and Paolo Surico

Publication Date: November 2018

Keyword(s): 'fuzzy' RD, employment, government spending, Natural Experiment and wages

Programme Area(s): International Macroeconomics and Finance and Monetary Economics and Fluctuations

Abstract: A series of discontinuities in the allocation mechanism of federal transfers to municipal governments in Brazil allow us to identify the causal effect of public spending on local labor markets, using a 'fuzzy' Regression Discontinuity Design (RDD). Our estimates imply a cost per job of about 8,000 US dollars per year and a local income multiplier around two. The effect comes mostly from employment in services and is more pronounced among less financially developed municipalities.

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Bibliographic Reference

Corbi, R, Papaioannou, E and Surico, P. 2018. 'Regional Transfer Multipliers'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13304