## Putting Public Investment to Work

_IMF Blog, August 11, 2021_

## Source details

**Canonical URL:** [Putting Public Investment to Work](https://www.imf.org/en/blogs/articles/2021/08/11/putting-public-investment-to-work)

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## Bibliographic details
- Authors: Mariano Moszoro
- Published: August 11, 2021

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### Dataset and methodology
- Drawing on a 19-year dataset of over 5,600 construction companies from 27 advanced economies and 14 emerging market economies.
- Measured the direct employment effect of $1 million of infrastructure spending by country income group and sector—electricity, roads, schools, hospitals, and water and sanitation.
- Because there is no data available for low-income developing countries, employment impacts for that group are estimated by extrapolating from advanced economies and emerging market economies.
- Job creation estimates depend on labor mobility (how easy it is to move across companies within sectors) and labor intensity (defined as the labor effects down the supply chain in a sector).

### Key findings: jobs created per $1 million of infrastructure spending
- Example extremes by mobility and intensity:
  - In an emerging market economy with high labor mobility and high labor intensity, around 35 jobs are created in water and sanitation per $1 million of additional investment.
  - In a country with low labor mobility and low labor intensity, that number falls to around 8 jobs per $1 million in water and sanitation.
- Advanced economies (assuming intermediate labor mobility and labor intensity levels):
  - Average of 3 jobs in schools and hospitals per $1 million.
  - Over 6 jobs in the energy sector per $1 million.
- Low-income developing countries (estimates via extrapolation):
  - Range from 16 jobs in roads to 30 jobs in water and sanitation per $1 million.
- Sectoral observation:
  - Each unit of public infrastructure investment creates more direct jobs in electricity in high-income countries and more jobs in water and sanitation in low-income countries.
- Aggregate impact:
  - One percent of global GDP in public investment spending can create more than seven million jobs worldwide through direct employment effects alone.

### Green investment and R&D impacts
- Green investment (per $1 million invested):
  - Around 5–10 jobs could be created in green electricity.
  - Around 2–12 jobs in efficient new buildings like schools and hospitals.
  - Around 5–14 jobs in green water and sanitation through efficient agricultural pumps and recycling.
- Research and development:
  - Around 4 jobs are created in R&D per $1 million invested.
  - These R&D jobs are mostly, if not exclusively, for high-skilled workers.
  - Note: R&D is a much smaller component of public investment and is mostly to government institutions and higher education.

### Policy-relevant implications
- Public spending on infrastructure can make a meaningful contribution to job creation through direct employment effects along supply chains.
- The composition of infrastructure spending (sector and green versus conventional) and the country context (income level, labor mobility, labor intensity) substantially affect the number of jobs created per dollar invested.

*Source: Putting Public Investment to Work — Marıano Moszoro, August 11, 2021.*

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## References

- [new IMF staff research](https://www.imf.org/en/Publications/WP/Issues/2021/05/06/The-Direct-Employment-Impact-of-Public-Investment-50251)

_Source: https://www.imf.org/en/blogs/articles/2021/08/11/putting-public-investment-to-work_