Do Government Purchases Affect Unemployment?

Holden, Steinar; Sparrman, Victoria

doi:10.1111/sjoe.12214

Cited by 34 publications

(25 citation statements)

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“…It also includes a discussion regarding data comparability, owing to the country-specific nature of the policy intervention variables and the change in the OECD classification system on policy interventions in 2002. 15 A variety of econometric estimators, technical fixes and diagnostic tests exist today to treat the endogeneity issue, which have been successfully used in economic empirical analyses (Halla et al 2016;Overesch and Rincke 2011), including those studying labour market policies and institutions (Holden and Sparrman 2017;Hijzen and Martin 2013). 16 The model was also tested for heteroskedasticity using the robust option available.…”

Section: Endnotesmentioning

confidence: 99%

Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison

Escudero

2018

IZA J Labor Policy

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This paper examines the effectiveness of active labour market policies (ALMPs) in improving labour market outcomes, especially of low-skilled individuals, by means of a pooled crosscountry and time series database for 31 advanced countries during the period 1985-2010. The analysis includes aspects of the delivery system to see how the performance of ALMPs is affected by different implementation characteristics. Among the notable results, the paper finds that ALMPs matter at the aggregate level, but mostly through an appropriate management and implementation. In this regard, sufficient allocation of resources to programme administration and policy continuity appear to be particularly important. Moreover, start-up incentives and measures aimed at vulnerable populations are more effective than other ALMPs in terms of reducing unemployment and increasing employment. Interestingly, the positive effects of these policies seem to be particularly beneficial for the low skilled.

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Section: Endnotesmentioning

confidence: 99%

Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison

Escudero

2018

IZA J Labor Policy

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“…According to empirical evidences of [8,9,10,11] government expenditure can enhance the level of employment and reduce unemployment in both developed and developing countries. However in spite of the huge government expenditure being spent on productive sectors such as infrastructures, defense of the citizenry, education and healthcare in Africa, there has been continuous rise in the level of unemployment in the continent.…”

Section: Background To the Studymentioning

confidence: 99%

“…Holden and Sparrman [9] empirically analyzed the effect of government purchases on unemployment in 20 OECD countries from 1980 to 2007. Using ex post factor methodology, the findings revealed that an increase in government purchases reduced unemployment by about 0.3 percentage point in the same year.…”

Section: Studies On the Relationship Between Unemployment And Governmmentioning

confidence: 99%

Impact of Disagregated Public Expenditure on Unemployment Rate of Selected African Countries: A Panel Dynamic Analysis

Onuoha¹,

Oyeyemi²

2019

JEMT

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The study examined the impact of disaggregated public expenditure on unemployment rate in Angola, Togo and Tunisia with panel data spanning from 2000 to 2017. The data were majorly sourced from the World Bank Indicator. The study employed Generalized Method of Moments (GMM) techniques for empirical analysis. The findings of two-step system GMM showed that expenditure on infrastructure and education reduce unemployment rate, while expenditure on defense and health increase unemployment rate in the region. The short-run elasticity estimate showed that infrastructure and education expenditures reduce unemployment rate by 9% and 1.83%. A unit rise in defense and health expenditure increase unemployment rate by 5.2% and 84.5%. The long-run elasticities of infrastructure and education expenditure reduce unemployment rate by 3.8% and 7.89%, while the long-run defense and health expenditure elasticities increase unemployment rate by 22.and Tunisia. The policy implication is that, the positive relationship between expenditure on health and unemployment could be attributed to mismanagement of government funds due to corruption, while that of defense and unemployment could be high rate of insecurity and crimes in the region.Therefore, the study recommended among others a drastic measure to further improve the education sector through adequate investment in education that will help in skills, development and training.

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“…Some studies observed that government intervention crowds‐in private investment, alluding to complete interventionist role by government (Cardoso, ). Specifically, Holden and Sparrman (), using 20 OECD countries data from 1980–2007, observed that increases in government purchases leads to decline in unemployment. Lugo () sums that government expenditure crowds‐out private investment when: (1) government invests in inefficient state‐owned firms; (2) private investors expect higher taxes to finance increases in expenditures in the future; and/or (3) the public sector competes with private sector for domestic credit.…”

Section: Review Of Related Literaturementioning

confidence: 99%

Revisiting the Determinants of Unemployment in Nigeria: Do Resource Dependence and Financial Development Matter?

Ogbeide¹,

Kanwanye²,

Kadiri³

2016

African Development Review

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The paper examines the determinants of unemployment in Nigeria from 1981 to 2013, using the error correction model (ECM), and with ordinary least squares (OLS) method for robustness check. Results from the short-run and long-run regressions show that resource dependence and growth in private credit/GDP by banks significantly worsen labour unemployment, suggesting likely effects of resource-curse, high cost of financial intermediation cum limited credit to the real economy. Real GDP per capita, FDI, trade openness and exchange rate depreciation significantly reduce labour unemployment in Nigeria, whereas increasing industrial capacity usage intensifies it. Government capital expenditure aggravates unemployment in both estimated models, though not significantly, showing rent-seeking and prolonged deficit-financing. Inflation had a mixed outcome and was not significant in both short-run and long-run estimation. Key policy implications of the study include the need to efficiently manage our natural resources; deepen the domestic financial sector; enhance fiscal discipline; promote a favourable macroeconomic environment to attract the right kind of real-sector investment; and raising the economy's competitiveness in labour-intensive processes.

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Do Government Purchases Affect Unemployment?

Cited by 34 publications

References 50 publications

Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison

Are active labour market policies effective in activating and integrating low-skilled individuals? An international comparison

Impact of Disagregated Public Expenditure on Unemployment Rate of Selected African Countries: A Panel Dynamic Analysis

Revisiting the Determinants of Unemployment in Nigeria: Do Resource Dependence and Financial Development Matter?

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