Gabriel Chodorow-Reich

Laura Feiveson

William Gui Woolston

Zachary Liscow

English

 The American Recovery and Reinvestment Act (ARRA) of 2009 included $88 billion of aid to state governments administered through the Medicaid reimbursement process. We examine the effect of these transfers on states' employment. Because state fiscal relief outlays are endogenous to a state's economic environment, OLS results are biased downward. We address this problem by using a state's pre-recession Medicaid spending level to instrument for ARRA state fiscal relief. In our preferred specification, a state's receipt of a marginal $100,000 in Medicaid outlays results in an additional 3.8 job-years, 3.2 of which are outside the government, health, and education sectors. (JEL H75, I18, I38, R23) </jats:p

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American Economic Journal Economic Policy

Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act

https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.4.3.118

Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act

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