Economists Fryer and Sacerdote estimate that each additional job cost as much as $400,000
NBER Working Paper No. w16759
JAMES FEYRER, Dartmouth College BRUCE SACERDOTE, Dartmouth College
We use state and county level variation to examine the impact of the American Readjustment and Recovery Act on employment. A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending. Time series analysis at the state level suggests a smaller response with a per job cost of about $400,000. These results imply Keynesian multipliers between 0.5 and 1.0, somewhat lower than those assumed by the administration. However, the overall results mask considerable variation for different types of spending. Grants to states for education do not appear to have created any additional jobs. Support programs for low income households and infrastructure spending are found to be highly expansionary. Estimates excluding education spending suggest fiscal policy multipliers of about 2.0 with per job cost of under $100,000.
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I like the final sentence. It’s almost saying, “If we completely ignore the stimulus program money that has a multiplier under 1, we would have a multiplier over 1.”
Wow, talk about trying to spin this.
The stimulus stimulated sassy salamanders superfluously. Another word starting with S.
Sounds salaciously super!
There is no such thing as a multiplier. The whole notion–as well as the math itself–is absurd.
There is a multiplier, but it’s always less than 1. Even when they claim it greater than 1, they’re neglecting to subtract the multiplier it would have had if they had left the money in the hands of those who earned it in the first place.
Kel, maybe debunking the “multiplier” idea could be the subject of your next article? When people hear multiplier, I think they assume the concept is over their heads so it could be useful to have a refutation of it.
My economic formula is very simple. x amount of dollars in my wallet – y amount of dollars left in my wallet after taxes = z money wasted
If I were to put it into a Multiplier Formula it might look something like this:
z * -10 = Jobs created
Keep in mind that the actual multiplier is completely fictional and arbitrary, much like theirs.
Recently, the Fed vice-chair was boasting how a team of their researchers concluded that QE2 would create 700k jobs. I’m not sure how they formulated this as being positive.
600B/700k = $857,000 per job
The stimulus stimulated Ben Bernanke! He was very stimulated by it, so stimulated that he now has the gall to lie on bigger and bigger stages. When economic terrorism is stimulated it is not the cause for rejoicing but rather it is a time for vigorous investigation into the inner workings of the unConstitutional coup. Their names need to be as well known as Mubarack!
Doesn’t matter, really – if it’s $1, it’s still sucking resources from the private sector to create jobs, perhaps the worst kind of malinvestment. These jobs either never go away, or not for a long time, and are used to justifiy further “stimulus” in the future. All the stupid articles in popular press – the “stimulus” saved this town!!!! How’s that for multiplier effect?
I have yet to see anything that is definitive on if the stimulus was effective or not. Could we please stop the spinning and Machiavellian antics. Real Estate Attorney Boulder
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