LAC_Policy_Notes

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Unformatted text preview: This includes all of the jobs supported by consumer expenditures resulting from wages in the two previous levels. Using an Input‐Output Model that considers all levels of inputs to construction, the US Federal Highway 142 Administration has estimated employment generated or supported from investments in highways. Keeping in mind the shortcomings of these calculations—and adjusting for them with available data 143 from LAC on wages, leakages by sub‐sector and skilled and unskilled labor divisions—the approach to calculating direct and indirect jobs provides a basis for estimating the employment generation potential of investments in all areas of infrastructure in countries outside of the US. A review of project documents, IEG reports, and sectoral ESW provides a sufficient starting point for this analysis with information about construction costs and direct employment levels for a variety of infrastructure projects across Latin America. By assigning wage assumptions to workers according to skill sets, 138 In recent years, the LAC Region has seen additional investments in infrastructure from private sector sources totaling between 1 and 2 percent of GDP per year. This range includes telecommunications investments which are mostly private throughout the region but does not include private housing stock. Calderon and Serven (2004a,b). 139 For a summary of other related issues such as risks to effective infrastructure investment, impact of public expenditure stimulus on short‐ and long‐term growth, the balance between new investments vs. maintenances see Schwartz, Andres, Dragoiu (2009). 140 This note uses the term “employment generation” to refer to annualized short‐term jobs mobilized directly or indirectly as the result of an investment. It does not consider substitution effects or imply change in the long‐term labor stock. 141 See, for example, Heintz and Pollin (2009) and Romer and Bernstein (2009),. 142 JOBMOD2.1: A Comprehensive Model for Estimating Employment Generation from Federal‐Aid Highway Projects (2006). Boston University Center for Transportation Studies under subcontract to Battelle Memorial Institute for U.S. Department of Transportation Federal Highway Administration Office of Transportation Policy Studies See also Weels (2008) for more recent results of this model. 143 In calculating secondary labor generation, a portion of machinery and equipment inputs are assumed to be imported depending upon the technology deployed in the sub‐sector providing a very basic discount for leakage. 109 estimating domestic and foreign content for both materials and equipment, a levelized set of results in terms of direct and indirect annualized employment can be calculated for a given sum of money expended—in this case US$1billion. These estimates do not account for substitution effect and are thus most applicable to economies with slack labor conditions and high unemployment among day laborers and construction workers. The most important result of this summary analysis is that the range of direct employment impacts is treme...
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This document was uploaded on 11/14/2013.

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