Discussion paper

DP13304 Regional Transfer Multipliers

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.


Corbi, R, E Papaioannou and P Surico (2018), ‘DP13304 Regional Transfer Multipliers‘, CEPR Discussion Paper No. 13304. CEPR Press, Paris & London. https://cepr.org/publications/dp13304