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The direct employment impact of public investment

Marian W. Moszoro
Marian W. Moszoro
   | 22 mar 2024
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Article Category: Empirical Paper
Publicado en línea: 22 mar 2024
Páginas: 59 - 74
Recibido: 02 ene 2023
Aceptado: 14 jul 2023
DOI: https://doi.org/10.2478/ijme-2023-0020
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© 2023 Marian W. Moszoro, published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Figure 1.

Job Content per US$1 Million of additional investment. Notes: The figure shows the estimates of the job content of US$1 million of investment for different sectors and country groups based on regressions of employment on revenues in 1999–2017, covering 47,580 observations for 5,679 privately owned and state-owned enterprises. The stripped bar and the red rhombus represent the labor mobility range and midpoint estimate, respectively, for medium labor intensity. Labor mobility is the easiness of moving across companies within sectors (given by the point estimates in Table 3) and labor intensity is the path-through share to the supply chain in the sector (parametrized between 35% and 65%). The thick horizontal dashes and the black triangle represent the overall maximum and minimum values and the average estimates, respectively, accounting for wide ranges of labor intensity. The estimates for low-income countries are extrapolated from the other estimates. AE: advanced economies; EME: emerging market economies; LIDC: low-income developing economies. Source: Author’s own estimations based on Compustat and Orbis.
Job Content per US$1 Million of additional investment. Notes: The figure shows the estimates of the job content of US$1 million of investment for different sectors and country groups based on regressions of employment on revenues in 1999–2017, covering 47,580 observations for 5,679 privately owned and state-owned enterprises. The stripped bar and the red rhombus represent the labor mobility range and midpoint estimate, respectively, for medium labor intensity. Labor mobility is the easiness of moving across companies within sectors (given by the point estimates in Table 3) and labor intensity is the path-through share to the supply chain in the sector (parametrized between 35% and 65%). The thick horizontal dashes and the black triangle represent the overall maximum and minimum values and the average estimates, respectively, accounting for wide ranges of labor intensity. The estimates for low-income countries are extrapolated from the other estimates. AE: advanced economies; EME: emerging market economies; LIDC: low-income developing economies. Source: Author’s own estimations based on Compustat and Orbis.

Job content in R&D by recipient type

(1) (2) (3) (4)
Government Higher education Business Non-profit
Spending in R&D (US$ million) 4.837***(1.281) 10.99***(3.970) 10.55**(4.609) 4.477**(2.020)
Country fixed effects Yes Yes Yes Yes
Cluster at country level Yes Yes Yes Yes
Observations 409 405 414 287
R-squared 0.690 0.425 0.635 0.331
Number of clusters 36 36 37 25

Job content by sectors and income group

Advanced economies Labor mobility
Labor intensity High Medium Low
Energy High 12.2 9.4 6.8
Medium 8.6 6.6 4.7
Low 6.6 5.1 3.6
Roads High 8.9 6.9 4.9
Medium 6.2 4.8 3.4
Low 4.8 3.7 2.6
Schools and hospitals High 6.4 4.3 2.4
Medium 4.4 3.0 1.7
Low 3.4 2.3 1.3
Water and sanitation High 7.9 5.7 3.4
Medium 5.6 4.0 2.4
Low 4.3 3.1 1.9
Emerging market economies Labor mobility
Labor intensity High Medium Low
Energy High 23.2 22.3 21.2
Medium 16.2 15.6 14.8
Low 12.5 12.0 11.4
Roads High 23.4 14.9 6.5
Medium 16.4 10.4 4.6
Low 12.6 8.0 3.5
Schools and hospitals High 22.2 17.7 13.1
Medium 15.5 12.4 9.2
Low 11.9 9.5 7.0
Water and sanitation High 35.1 24.6 14.2
Medium 24.6 17.2 9.9
Low 18.9 13.2 7.6
Low-income developing countries Labor mobility
Labor intensity High Medium Low
Energy High 37.9 35.1 32.5
Medium 26.6 24.6 22.7
Low 20.4 18.9 17.5
Roads High 31.4 22.9 14.5
Medium 22.0 16.0 10.2
Low 16.9 12.3 7.8
Schools and hospitals High 35.6 31.1 26.5
Medium 24.9 21.8 18.6
Low 19.2 16.8 14.3
Water and sanitation High 53.9 43.4 33.0
Medium 37.8 30.4 23.1
Low 29.0 23.4 17.8

Employment and GDP in Advanced Economies (AEs) and Emerging Market Economies (EMEs) This appendix contains the list of countries (classified by level of income), the employment in millions of employees, and the GDP in billions of U.S. dollars. The sample includes firm-level data from 38 AEs and 63 EMEs, for a total of 101 economies representing 95% of the global GDP.

Country Income level Employment (millions) GDP (US$ billions)
Albania Emerging Market Economy 1.1 15.4
Algeria Emerging Market Economy 11.1 172.8
Argentina Emerging Market Economy 17.1 445.5
Armenia Emerging Market Economy 1.6 13.4
Azerbaijan Emerging Market Economy 5.0 47.2
The Bahamas Emerging Market Economy 0.2 12.7
Bahrain Emerging Market Economy 0.9 38.2
Barbados Emerging Market Economy 0.1 5.2
Belarus Emerging Market Economy 4.3 62.6
Belize Emerging Market Economy 0.2 2.0
Bolivia Emerging Market Economy 5.6 42.4
Bosnia and Herzegovina Emerging Market Economy 1.0 20.1
Botswana Emerging Market Economy 1.5 18.7
Brazil Emerging Market Economy 92.1 1,847.0
Brunei Darussalam Emerging Market Economy 0.2 12.5
Bulgaria Emerging Market Economy 3.1 66.2
Cabo Verde Emerging Market Economy 0.3 2.0
Chile Emerging Market Economy 8.6 294.2
China Emerging Market Economy 775.3 1,4140.2
Colombia Emerging Market Economy 22.9 327.9
Costa Rica Emerging Market Economy 2.3 61.0
Croatia Emerging Market Economy 1.4 60.7
Dominican Republic Emerging Market Economy 4.6 89.5
Ecuador Emerging Market Economy 7.5 107.9
Egypt Emerging Market Economy 25.9 302.3
El Salvador Emerging Market Economy 2.8 26.9
Hungary Emerging Market Economy 4.5 170.4
India Emerging Market Economy 32.0 2,935.6
Indonesia Emerging Market Economy 127.1 1,111.7
Iran Emerging Market Economy 25.1 458.5
Jamaica Emerging Market Economy 1.2 15.7
Jordan Emerging Market Economy 1.8 44.2
Kazakhstan Emerging Market Economy 8.9 170.3
Kuwait Emerging Market Economy 2.7 137.6
Malaysia Emerging Market Economy 15.0 365.3
Mauritius Emerging Market Economy 0.5 14.4
Mexico Emerging Market Economy 54.4 1,274.2
Mongolia Emerging Market Economy 1.3 13.6
Morocco Emerging Market Economy 11.2 119.0
North Macedonia Emerging Market Economy 0.8 12.7
Oman Emerging Market Economy 2.3 76.6
Pakistan Emerging Market Economy 59.8 284.2
Panama Emerging Market Economy 1.9 68.5
Peru Emerging Market Economy 16.9 229.0
Philippines Emerging Market Economy 42.1 356.8
Poland Emerging Market Economy 16.5 565.9
Qatar Emerging Market Economy 2.2 191.8
Romania Emerging Market Economy 8.8 243.7
Russia Emerging Market Economy 72.7 1,637.9
Serbia Emerging Market Economy 2.3 51.5
Seychelles Emerging Market Economy 0.0 1.6
South Africa Emerging Market Economy 16.6 358.8
Suriname Emerging Market Economy 0.1 3.8
Thailand Emerging Market Economy 37.4 529.2
Trinidad and Tobago Emerging Market Economy 0.6 22.6
Tunisia Emerging Market Economy 3.5 38.7
Turkey Emerging Market Economy 28.2 743.7
Turkmenistan Emerging Market Economy 2.5 46.7
Ukraine Emerging Market Economy 16.4 150.4
United Arab Emirates Emerging Market Economy 7.7 405.8
Uruguay Emerging Market Economy 1.7 59.9
Venezuela Emerging Market Economy 8.4 70.1
Vietnam Emerging Market Economy 58.3 261.6
Australia Advanced Economy 12.9 1,376.3
Austria Advanced Economy 4.4 447.7
Belgium Advanced Economy 4.9 517.6
Canada Advanced Economy 19.0 1,730.9
Cyprus Advanced Economy 0.4 24.3
Czech Republic Advanced Economy 5.3 247.0
Denmark Advanced Economy 2.9 347.2
Estonia Advanced Economy 0.7 31.0
Finland Advanced Economy 2.6 269.7
France Advanced Economy 25.6 2,707.1
Germany Advanced Economy 42.0 3,863.3
Greece Advanced Economy 3.9 214.0
Hong Kong SAR Advanced Economy 3.9 373.0
Iceland Advanced Economy 0.2 23.9
Ireland Advanced Economy 2.3 384.9
Israel Advanced Economy 4.0 387.7
Italy Advanced Economy 23.3 1,988.6
Japan Advanced Economy 67.4 5,154.5
Korea Advanced Economy 26.9 1,629.5
Latvia Advanced Economy 0.9 35.0
Lithuania Advanced Economy 1.4 53.6
Luxembourg Advanced Economy 0.5 69.5
Macao SAR Advanced Economy 0.4 55.1
Malta Advanced Economy 0.2 14.9
Netherlands Advanced Economy 8.9 902.4
New Zealand Advanced Economy 2.7 204.7
Norway Advanced Economy 2.7 417.6
Portugal Advanced Economy 5.0 236.4
Puerto Rico Advanced Economy 1.0 99.9
Singapore Advanced Economy 3.7 362.8
Slovak Republic Advanced Economy 2.4 106.6
Slovenia Advanced Economy 1.0 54.2
Spain Advanced Economy 19.8 1,397.9
Sweden Advanced Economy 5.1 528.9
Switzerland Advanced Economy 5.0 715.4
Taiwan Province of China Advanced Economy 11.5 586.1
United Kingdom Advanced Economy 32.8 2,743.6
United States Advanced Economy 156.9 21,439.5
Sum 2,204.4 83,218.7

Immediate Job Content in Selected Infrastructure Sectors

Advanced economies (1) (2) (3) (4)
Pool Panel Without 2008–2009 Revenue increases
Electricity 4.278***(0.238) 2.363***(0.206) 2.390***(0.217) 2.433***(0.210)
Roads 3.124***(0.114) 1.722***(0.128) 1.742***(0.141) 1.817***(0.142)
Schools and hospitals 2.223***(0.238) 0.850***(0.125) 0.817***(0.116) 0.824***(0.166)
Water and sanitation 2.778***(0.348) 1.206***(0.235) 1.184***(0.252) 1.153***(0.290)
Fixed effects Country Firm Firm Firm
Clustered at Firm Firm Firm Firm
Observations 43,485 43,485 38,971 27,244
R-squared 0.637 0.201 0.198 0.203
Number of clusters 5,123 5,123 5,123 5,123
Emerging market economies (1) (2) (3) (4)
Pool Panel Without 2008–2009 Revenue increases
Electricity 8.120***(1.743) 7.406**(3.175) 8.300**(3.449) 7.832**(3.740)
Roads 8.178***(1.370) 2.287***(0.679) 2.037***(0.722) 1.902**(0.779)
Schools and hospitals 7.764***(2.376) 4.578**(1.788) 4.777**(2.171) 3.898**(1.663)
Water and sanitation 12.28***(4.318) 4.965*(2.593) 5.587*(2.973) 4.829 (4.011)
Fixed effects Country Firm Firm Firm
Clustered at Firm Firm Firm Firm
Observations 4,095 4,095 3,660 2,539
R-squared 0.563 0.157 0.168 0.161
Number of clusters 556 556 556 556

Sectors and industries by data source

Sector Compustat (NAICS) Orbis (CPA)
Electricity 237130 – Power and Communication Line and Related Structures Construction

F42.2.1 – Construction of utility projects for fluids

F42.2.2 – Construction of utility projects for electricity and telecommunications
Roads

237310 – Highway, Street, and Bridge Construction

333120 – Construction Machinery Manufacturing (Drags, road construction and road maintenance equipment, manufacturing)

F42.1 – Construction of roads and railways, including:

F42.1.1 – Construction of roads and motorways

F42.1.2 – Construction of railways and underground railways

F42.1.3 – Construction of bridges and tunnels
Schools and hospitals 2362 – Commercial and Institutional Building Construction F42.9.9 – Construction of other civil engineering projects n.e.c.
Water and sanitation 237110 – Water and Sewer Line and Related Structures Construction F42.9.1 – Construction of water projects

Summary statistics

Advanced economies Countries Obs. Mean Std. Dev.
Revenue 27 43,485 11.0 14.5
Employees 27 43,485 45.1 74.4
Emerging market economies Countries Obs. Mean Std. Dev.
Revenue 14 4,095 7.7 11.8
Employees 14 4,095 123.4 195.0
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