Public Investments and Job Creation: from employment-impact assessments to employer of last resort

1
Public Investments and Job Creation from
employment-impact assessments to employer of last
resort

•  
• A presentation at the Global Development and
  Environment Institute of Tufts University
• July 24, 2014
• by Steven Miller
• stevenkmiller_at_gmail.com

2
Linking development project experience with
economic policy

• This presentation attempts to link project level
  experiences on job creation with a larger vision
  of economic and employment policy.
• Likewise we believe that work in developing
  countries is relevant to the experiences of more
  industrialized countries, including those in the
  US.

3
Moving beyond the conventional wisdom on job
creation

• Typically job creation is seen from a small
  number of broad perspectives
• Promote economic growth which it is assumed will
  in turn lead to job creation
• Facilitate the role of the private sector which
  is the primary engine of job creation
• Education and training programmes To better
  prepare job seekers for the labour market.
• In this presentation, I shall to examine an
  enhanced role which the public sector can and
  should play in job creation, mainly through
  public investment programmes and policies.

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Employment Impact Assessments and Employer of
Last Resort programmes

• The focus will be not only on promoting economic
  growth as a means to stimulate job creation, but
  also looking at how to increase the impact of
  growth on job creation, in other words, increase
  the employment impact of economic growth. A major
  tool for doing so will be ongoing work of the ILO
  in the field of employment impact assessments.
• Looking at the inverse relationship between jobs
  and growth, the presentation will also discuss
  some experiences in direct job creation the
  concept and experiences employment guarantee or
  employer of last resort programmes, including
  the work of a group of economists, governments,
  institutions and advocacy groups in this field.

5
Expected Impacts from Job Creation Programs

• Employment
• Assets
• Skills and work experience

6
Infrastructure and Employment What is the
potential impact in developing countries?

• 3 to 5 times more direct employment creation
• 1.6 to 2.0 times more indirect employment
  creation through multiplier effects (upstream and
  downstream linkages)
• 50 savings in foreign exchange
• Financial costs typically 20 less
• Impact of infrastructure on output, productivity
  and employment

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Advantages and Limitations to supply-side
approaches

• Advantages
• Focus is on reorientation of existing investment
  allocations requires no new resources
• Usually can be implemented by existing
  institutional structures
• Disadvantages
• Usually reaches only a small proportion of the
  unemployed

8
Comparing Supply- and Demand Driven Programs

• Supply-driven programs
• Use existing investment resources and
  infrastructure requirements as the starting point
• Works to increase the employment impact of these
  resources
• Tries to mainstream labor-based approaches into
  current investment programs and institutional
  set-ups to ensure sustainability
• Focus on cost-effective and high-quality asset
  creation with employment as a secondary objective

9
Comparing Supply- and Demand Driven Programs

• Demand-driven programs
• Takes current levels of un- and under-employment
  as the starting point
• With job creation as the primary objective,
  explores how to create useful and productive job
  opportunities to meet the existing demand for
  employment
• Often relies on special project management units
• Issue of sustainability of special job creation
  programs

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Evaluating the employment impact of
infrastructure investments

• Comparative project-level studies comparing
  labour-based with equipment-based methodologies
• Public investment budget analysis
• Simulations of employment impact of
  infrastructure investments on the macro-economy

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Comparison of Equipment based and labor based
road construction financial and economic
costingTable1
Source Technology Choice Man or Machine,
including case studies from Lesotho and Zimbabwe,
Lennartsson, M. and Stiedl, D., ILO, 1995.
12
Simulation of the macro-economic impacts of a 30
billion FCFA investment in rural road
rehabilitation in Cameroon

•  Evaluating the impact of labour-intensive
  investments the case of Cameroon,  Samuel
  Yemene, ILO, 2007
• 30 billion FCFA is equivalent to the amount
  earmarked annually for rural road rehabilitation
  in the public investment budget and HIPC funds
• Use of fixed-price input output model
• 70,6 million USD

13
Table 2 Economic and Employment impacts of a 71
million USD rural road rehabilitation programme
in Cameroon(source Evaluating the impact of
labour-intensive investments the case of
Cameroon,  Samuel Yemene, ILO, 2007)
14
The American Recovery and Reinvestment Act

• Labor Market Outcomes of Infrastructure
  Expenditures under the American Recovery and
  Reinvestment Act
• Ajit Zacharias, Thomas Masterson and Kijong Kim
• Levy Economics Institute of Bard College
•  
• January 13, 2009
•  
• A Report for the International Labor Organization

15
ARRA

• Infrastructure expenditures constitute only a
  small portion of the total potential fiscal
  stimulus from the ARRA. Grants by the federal
  government to state and local governments for
  infrastructure investments are estimated to be
  44 billion, or 5.6 percent of the projected
  total budgetary cost of the ARRA over the period
  2009-2019 (CBO, 2009).
• Note A broader definition of infrastructure
  would suggest total expenditures worth nearly 90
  billion, or about 11.4 percent of the total ARRA
  stimulus.

16
ARRA

• Tax cuts, transfers to individuals, and transfers
  to state and local governments to support public
  education and medical assistance for the poor
  (Medicaid) account for 82 percent of the ARRA.
  Thus, it is reasonable to assume that the effects
  of the ARRA on aggregate output and employment
  will be influenced, at least in the immediate
  future, only to a limited extent by the
  infrastructure investments made possible by the
  legislation. The ARRA is mainly a tax-transfer
  program and not a public works program.

17
ARRA

• Our estimate of the size of infrastructure
  expenditures is based on the information
  collected by the federal government from those
  who received ARRA funds in the form of contracts,
  loans and grants. The information pertains to
  funds awarded and expenditures incurred between
  February 17, 2009 and September 30, 2009. We
  combine the data about the recipients of grants
  and loans to form a database of 117,282 records
  where each record represents an award of funds
  made under the ARRA in the form of grants
  (116,675 records) or loans (607 records). The
  recipients reported the amount of infrastructure
  expenditures incurred in the reference period.
  The total amount awarded in contracts, loans and
  grants make up about 27 percent of the total
  fiscal stimulus from the ARRA during the period.
  The amount actually spent on infrastructure is
  4.4 billion (2.6 percent of the total ARRA
  fiscal stimulus).

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Table 3 Infrastructure Expenditures for the
first two quarters of ARRA spending and
resulting job creation impacts(based on ARRA
recipient reports covering the period
February-September 2009)(Source Zacharias,
Masterson and Kim, Labor Market Outcomes of
Infrastructure Expenditures under the American
Recovery and Reinvestment Act, Levy Economics
Institute of Bard College, 2009.
Industry code Industry name Expend-itures (millions USD) Share of total () Jobs Created Jobs Created Jobs Created
Industry code Industry name Expend-itures (millions USD) Share of total () Direct Indirect Total
14 Water, sewage and other systems 54 1.2 39 618 657
15 Construction 2,992 67.4 20,706 12,568 33,274
106 Transit and ground passenger transportation 1,055 23.7 11,557 10,816 22,373
109 Support activities for transportation 50 1.1 445 289 734
123 Real estate 168 3.8 372 599 971
  All others 123 2.8 826 461 1,287
  Total 4,442 100.0 33,945 25,351 59,296
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Table 4 Employment multipliers for industries
benefiting the most from infrastructure
expenditures(Source Zacharias, Masterson and
Kim, Labor Market Outcomes of Infrastructure
Expenditures under the American Recovery and
Reinvestment Act, Levy Economics Institute of
Bard College, 2009.
Industry code Industry name Direct Indirect Total
14 Water, sewage and other systems 0.72 11.43 12.15
15 Construction 6.92 4.20 11.12
106 Transit and ground passenger transportation 10.96 10.25 21.21
109 Support activities for transportation 8.88 5.76 14.64
123 Real estate 2.09 3.36 5.45
  All industries 6.36 4.47 10.83
20
Table 5 Distribution of additional employment
due to infrastructure expenditures among
industries(based on ARRA recipient reports
covering the period February-September
2009,Source Zacharias, Masterson and Kim,
Labor Market Outcomes of Infrastructure
Expenditures under the American Recovery and
Reinvestment Act, Levy Economics Institute of
Bard College, 2009.
Industry/Sector Number Percent
Construction 20,816 35.1
Manufacturing 3,674 6.2
Wholesale and retail trade 3,887 6.6
Transportation and Warehousing 13,236 22.3
Transit and Ground passenger transportation 11,581 19.5
Other Transportation and Warehousing 1,655 2.8
Finance and Insurance 716 1.2
Real Estate and Rental And Leasing 763 1.3
Professional, Scientific, Technical Services 2,852 4.8
Management, Administrative and Support, and Waste Management Services 2,660 4.5
State and local government 7,942 13.4
Local government passenger transit 6,431 10.8
Other state and local government 1,510 2.5
All others 2,750 4.6
TOTAL 59,296 100.0
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Table 6 Selected demographic characteristics of
those employed due to infrastructure expenditures
(percent)(based on ARRA recipient reports
covering the period February-September
2009Source Zacharias, Masterson and Kim,
Labor Market Outcomes of Infrastructure
Expenditures under the American Recovery and
Reinvestment Act, Levy Economics Institute of
Bard College, 2009.)
Category 2008 Job losses, December 2007 to November 2009 ARRA infrastructure
A. Sex      
Male 52.0 67.7 79.5
Female 48.0 32.3 20.5
B. Race/Ethnicity      
White 70.2 70.4 70.3
Nonwhite 29.8 29.6 29.7
C. Education      
No College Degree 65.9 102.9 82.9
College Graduate 34.0 -2.9 17.1
D. Age      
Prime working age (25 to 60) 77.4 52.9 82.6
Other ages 22.6 47.1 17.4
22
IMPACT OF INFRASTRUCTURE INVESTMENTS
ON EMPLOYMENT AND ECONOMIC ACTIVITY IN THE U.S.
ECONOMY BY J O S H B I V E N S Economic Policy
Institute (2014)
23
IMPACT OF INFRASTRUCTUREINVESTMENTS ON
EMPLOYMENT ANDECONOMIC ACTIVITY IN THE U.S.
ECONOMY

• Scenario one cancels scheduled cuts stemming from
  the budget sequester automatic, across the
  board cuts to discretionary spending called for
  in the Budget Control Act (BCA) of 2011). Under
  scenario one, a debt-financed 18 billion annual
  investment in infrastructure yields a 29 billion
  increase in GDP and 216,000 net new jobs by the
  end of the first year, with the increased levels
  then sustained over the next decade.
• Note As of January 2014, a third of the
  scheduled sequester cuts were cancelled for the
  next two years only. 

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Table 7 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario One Table 7 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario One Table 7 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario One Table 7 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario One Table 7 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario One Table 7 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario One

Debt Revenue, Revenue, Transfer Regulatory
progressive regressive Cuts mandates


Total Amount of Spending (billions USD) 18 18 18 18 18
Gross GDP Increase from Spending (billions USD) 29 29 29 29 29
Gross Employment Increase from Spending 216,000 216,000 216,000 216,000 216,000
Gross GDP Decrease from Financing (billions USD) 0.0 6.3 16.2 28.8 3.6
Gross Employment Decrease from Financing 0 47,250 121,500 216,000 27,000

Net GDP Increase from Package (billions USD) 28.8 22.5 12.6 0.0 25.2
Net Employment Increase from Package 216,000 168,750 94,500 0 189,000

Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for progressive tax increases is (-) 0.9, the multiplier for regressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for progressive tax increases is (-) 0.9, the multiplier for regressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for progressive tax increases is (-) 0.9, the multiplier for regressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for progressive tax increases is (-) 0.9, the multiplier for regressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for progressive tax increases is (-) 0.9, the multiplier for regressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for progressive tax increases is (-) 0.9, the multiplier for regressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios described in the text.

Source Authors analysis of Bivens (2012) Congressional Budget Office (2013), Council of Economic Advisors and Moodys Analytics Bureau of Economic Analysis National Income and Product Accounts Source Authors analysis of Bivens (2012) Congressional Budget Office (2013), Council of Economic Advisors and Moodys Analytics Bureau of Economic Analysis National Income and Product Accounts Source Authors analysis of Bivens (2012) Congressional Budget Office (2013), Council of Economic Advisors and Moodys Analytics Bureau of Economic Analysis National Income and Product Accounts Source Authors analysis of Bivens (2012) Congressional Budget Office (2013), Council of Economic Advisors and Moodys Analytics Bureau of Economic Analysis National Income and Product Accounts Source Authors analysis of Bivens (2012) Congressional Budget Office (2013), Council of Economic Advisors and Moodys Analytics Bureau of Economic Analysis National Income and Product Accounts Source Authors analysis of Bivens (2012) Congressional Budget Office (2013), Council of Economic Advisors and Moodys Analytics Bureau of Economic Analysis National Income and Product Accounts
25
IMPACT OF INFRASTRUCTUREINVESTMENTS ON
EMPLOYMENT ANDECONOMIC ACTIVITY IN THE U.S.
ECONOMY

• Under scenario two, a debt-financed package of
  green investments totaling 92 billion annually
  boosts GDP by 147 billion and generates 1.1
  million net new jobs by the end of the first
  year, with the increased levels then sustained
  over the next decade.

26
IMPACT OF INFRASTRUCTUREINVESTMENTS ON
EMPLOYMENT ANDECONOMIC ACTIVITY IN THE U.S.
ECONOMY

• Scenario two implements a package of green
  investments that includes a large increase in
  investments in the energy efficiency of
  residential and commercial buildings and upfront
  investments to construct a national smart grid,
  yielding 92 billion annually in infrastructure
  investments over the next decade.

27
Table 8 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Two Table 8 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Two Table 8 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Two Table 8 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Two Table 8 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Two Table 8 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Two

Debt Revenue, Revenue, Transfer Regulatory
progressive regressive Cuts mandates


Total Amount of Spending (billions USD) 92 92 92 92 92
Gross GDP Increase from Spending (billions USD) 147 147 147 147 147
Gross Employment Increase from Spending 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000
Gross GDP Decrease from Financing (billions USD) 0 32 83 147 18
Gross Employment Decrease from Financing 0 241,500 621,000 1,104,000 138,000

Net GDP Increase from Package (billions USD) 147,000 115,000 64 0 129
Net Employment Increase from Package 1,104,000 862,500 483,000 0 966,000

Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investment is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place over the next decade as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investment is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place over the next decade as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investment is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place over the next decade as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investment is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place over the next decade as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investment is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place over the next decade as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investment is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place over the next decade as described in the text.

Source Authors analysis of Congressional Budget Office (2012) Electric Power Research Institute (2011) and Pollin, Heintz, and Garrett-Peltier (2009). Source Authors analysis of Congressional Budget Office (2012) Electric Power Research Institute (2011) and Pollin, Heintz, and Garrett-Peltier (2009). Source Authors analysis of Congressional Budget Office (2012) Electric Power Research Institute (2011) and Pollin, Heintz, and Garrett-Peltier (2009). Source Authors analysis of Congressional Budget Office (2012) Electric Power Research Institute (2011) and Pollin, Heintz, and Garrett-Peltier (2009). Source Authors analysis of Congressional Budget Office (2012) Electric Power Research Institute (2011) and Pollin, Heintz, and Garrett-Peltier (2009). Source Authors analysis of Congressional Budget Office (2012) Electric Power Research Institute (2011) and Pollin, Heintz, and Garrett-Peltier (2009).
28
IMPACT OF INFRASTRUCTUREINVESTMENTS ON
EMPLOYMENT ANDECONOMIC ACTIVITY IN THE U.S.
ECONOMY

• Scenario three makes an ambitious investment in
  largely traditional infrastructure projects in
  transportation and utilities (particularly water
  treatment, distribution, and sewage systems) to
  nearly close the U.S. infrastructure deficit
  identified by the American Society of Civil
  Engineers (ASCE) and yield 250 billion annually
  in infrastructure investment between now and
  2020.
•  

29
IMPACT OF INFRASTRUCTUREINVESTMENTS ON
EMPLOYMENT ANDECONOMIC ACTIVITY IN THE U.S.
ECONOMY

• Under scenario three, a debt-financed 250
  billion annual investment boosts GDP by 400
  billion and overall employment by 3 million net
  new jobs by the end of the first year, with the
  increased levels then sustained over the
  seven-year life of the investment.

30
Table 9 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Three Table 9 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Three Table 9 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Three Table 9 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Three Table 9 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Three Table 9 Employment and GDP impacts of U.S. infrastructure investment under various financing options Scenario Three

Debt Revenue, Revenue, Transfer Regulatory
progressive regressive Cuts mandates


Total Amount of Spending (billions USD) 250 250 250 250 250
Gross GDP Increase from Spending (billions USD) 400 400 400 400 400
Gross Employment Increase from Spending 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000
Gross GDP Decrease from Financing (billions USD) 0 88 225 400 50
Gross Employment Decrease from Financing 0 656,250 1,687,500 3,000,000 375,000

Net GDP Increase from Package (billions USD) 400,000 313,000 175,000 0 350
Net Employment Increase from Package 3,000,000 2,343,750 1,312,500 0 2,625,000

Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place between 2014 and 2020 as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place between 2014 and 2020 as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place between 2014 and 2020 as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place between 2014 and 2020 as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place between 2014 and 2020 as described in the text. Note Multipliers are based on evidence reviewed in Bivens (2011) and Bivens (2012c). Specifically, the multiplier for infrastructure investments is 1.6, the multiplier for regressive tax increases is (-) 0.9, the multiplier for progressive tax increases is (-) 0.35, the multiplier for transfers is 1.6, and following Bivens (2012c), 20 percent of the stimulative effect of investments driven by regulatory mandates are crowded out. For employment impacts, we assume each percentage-point addition to GDP adds 1.2 million jobs to the economy. The total spending figures are based on the infrastructure investment scenarios and are annual gains taking place between 2014 and 2020 as described in the text.

Source Authors analysis of Bureau of Labor Statistics Employment Requirements Matrix industry codes receiving spending flows to finance across-the-board increase in traditional infrastructure to close infrastructure deficit identified by ASCE (2013) . Source Authors analysis of Bureau of Labor Statistics Employment Requirements Matrix industry codes receiving spending flows to finance across-the-board increase in traditional infrastructure to close infrastructure deficit identified by ASCE (2013) . Source Authors analysis of Bureau of Labor Statistics Employment Requirements Matrix industry codes receiving spending flows to finance across-the-board increase in traditional infrastructure to close infrastructure deficit identified by ASCE (2013) . Source Authors analysis of Bureau of Labor Statistics Employment Requirements Matrix industry codes receiving spending flows to finance across-the-board increase in traditional infrastructure to close infrastructure deficit identified by ASCE (2013) . Source Authors analysis of Bureau of Labor Statistics Employment Requirements Matrix industry codes receiving spending flows to finance across-the-board increase in traditional infrastructure to close infrastructure deficit identified by ASCE (2013) . Source Authors analysis of Bureau of Labor Statistics Employment Requirements Matrix industry codes receiving spending flows to finance across-the-board increase in traditional infrastructure to close infrastructure deficit identified by ASCE (2013) .
31
IMPACT OF INFRASTRUCTUREINVESTMENTS ON
EMPLOYMENT ANDECONOMIC ACTIVITY IN THE U.S.
ECONOMY

• Under all scenarios, jobs created are
  disproportionately male, Latino, and skewed away
  from younger workers.

32
Part IIDemand-driven public employment
programsEmployment guarantee programs and the
concept of employer of last resort. 
33
Economic Advantages of an ELR

• Improves and maintain levels of aggregate demand
• Improves income distribution
• Struggles against poverty and exclusion
• Fixes a minimum wage for the formal and the
  informal sector
• It is counter cyclical

33
34
Concept of Employer of Last Resort

• Offers a job to anyone of legal working age who
  is willing and able to work
• Will make a commitment to work in useful social
  and productive activities
• Free entrance and exit to the program
• Provides a uniform compensation package at a
  fixed minimum wage
• Takes workers  as they are 
• Links training with all activities

35
Objections to ELR

• Affordability Governments cant afford to make
  an open-ended commitment
• Will threaten macro-economic stability inflation
  and currency depreciation
• Unmanageable leads to corrpution, not enough
  useful work, incorrigible workers

36
ELR as a Buffer Stock

• Government hires labor off the bottom at the
  ELR wage and sells it at any higher wage
• A wage floor cannot lead to pressure on wages
• The buffer stock effectively enforces a minimum
  wage and avoids the race to the bottom which is
  represented by the informal economy
• Hence ELR stabilized wages, production costs,
  incomes, consumption, prices and currency

37
The Jefes de Hogar program of Argentina

• Was implemented after the 2001-02 crisis
• Massive devaluation and 25 of unemployment rate.
  
• Poverty above 50 of the total population
• Aimed to provide a job to unemployed people
  willing to devote 20 hours per week
• Centralized administration of the program
• Projects at local level
• Participation of civil society

38
Plan Jefes de Hogar Desempleados

• 2.4 million beneficiaries at the peak in 2004
• Total Cost
• 0.92 of GDP
• 4.9 of Federal Budget
• Coverage
• 16 of the all households nationwide
• In some provinces, 40 of households
• Very young population 47 below 35 years old
• 71 female of which 60 female headed households
  (single parent)

39
82 are engaged in work
40
Typical activities

• Production
• Bakery, Clothing, Bricks, Community farms
• Construction and self construction
• At individual level or cooperatives
• Production of services
• Childcare, Elderly car
• Teaching assistance
• Community and school kitchens
• Health programs support
• Education and vocational training

41
National Rural Employment Guarantee Act in India

• 30.72 million households in 330 districts were
  provided work compared to the demand received
  from 30.88 million households (99.5 which is a
  great achievement)
• Average of 93,090 households per district
• On average, 39.21 person-days of work were
  provided per household versus the promised
  "guarantee" of 100 days of work for each
  household (i.e. 39.2 ) caused by lack of
  awareness, inadequate capacity to deliver, and
  the fact that the program is only two years old.
• However in total 2.1 million households have
  completed 100 days of work

42
National Rural Employment Guarantee Act in India

• The number of days of employment provided is not
  limited by the ability to finance the program,
  but rather defined as a right by legislation
• The present expenditure figure represents about
  0.4 of GDP
• As the program is scaled up to meet its targets,
  these expenditures would not go beyond 1 of GDP,
  largely affordable for the Indian economy
• Approximately US 8.52 million (393.58 million
  rupees) total costs was spent per district
• Between 60 and 70 is spent on labor costs

43
Economists for Full Employment

• For further information on public and employer
  of last resortprogrammes, see
• The Economists for Full Employment Network at
• http//www.economistsforfullemployment.org/
• Thank you!
• Steven Miller
• stevenkmiller_at_gmail.com