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Fiscal Policy and Occupational Employment Dynamics
Author(s) -
BREDEMEIER CHRISTIAN,
JUESSEN FALKO,
WINKLER ROLAND
Publication year - 2020
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12627
Subject(s) - labour economics , business cycle , economics , government (linguistics) , capital (architecture) , service (business) , dynamics (music) , macroeconomics , economy , history , linguistics , philosophy , archaeology , physics , acoustics
We document substantial heterogeneity in occupational employment dynamics in response to government spending shocks in the United States. Employment rises most strongly in service, sales, and office (“pink‐collar”) occupations. By contrast, employment in blue‐collar occupations is hardly affected by fiscal policy. We provide evidence that occupation‐specific changes in labor demand are key for understanding these findings. We develop a business‐cycle model that explains the heterogeneous occupational employment dynamics as a consequence of composition effects due to heterogeneous employment changes across industries and occupation‐specific within‐industry employment shifts due to differences in the short‐run substitutability between labor and capital services across occupations.