Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46084
Authors: 
Lundqvist, Heléne
Dahlberg, Matz
Mörk, Eva
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5177
Abstract: 
The effectiveness of public funds in increasing public employment has long been a question on public and labor economists' minds. In most federal countries local governments employ large fractions of the working population, meaning that a tool for stimulating local public employment can substantially affect the overall unemployment level. This paper asks whether general grants to lower-level governments have the potential of doing so. Applying the regression kink design to the Swedish grant system, we are able to estimate causal effects of intergovernmental grants on personnel in different local government sectors. Our robust conclusion is that personnel in the central administration increased substantially after a marginal increase in grants, but that such an effect was lacking both for total personnel and personnel in child care, schools, elderly care, social welfare and in technical services. We suggest several potential reasons for these results, such as heterogeneous treatment effects and bureaucratic influence in the local decision-making process.
Subjects: 
fiscal federalism
intergovernmental grants
public employment
regression kink design
instrumental variables
JEL: 
C33
H11
H70
J45
Document Type: 
Working Paper

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