The American Recovery and Reinvestment Act Destroyed Private-Sector Jobs
May 17, 2011
In a new study, Timothy Conley, an economist at the University of Western Ontario, and Bill Dupor, an economist at the Ohio State University, use variation across states to estimate the number of jobs created or saved as a result of the spending component of the American Recovery and Reinvestment Act (ARRA). The key sources of identification are ARRA highway funding and the intensity of state sales tax usage.
- Conley and Dupor estimate the ARRA created or saved 450,000 government-sector jobs and destroyed or forestalled one million private sector jobs.
- State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment.
- The majority of destroyed or forestalled jobs were in growth industries including health, education, professional and business services.
- The best-case scenario for an effectual ARRA has the Act creating or saving a net 659,000 jobs, mainly in government.
Source: Timothy Conley and Bill Dupor, "The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled," Ohio State University, May 12, 2011.
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