Public Investment Multipliers: Domestic vs. Foreign Labor

• Main Authors: Yu-Shan Kuo, 郭毓姍
• Other Authors: Shu-Chun S. Yang
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/gejhdb

碩士 === 國立中山大學 === 經濟學研究所 === 106 === Foreign workers are increasingly important in public infrastructure construction. The macroeconomic literature, however, has not paid much attention to this phenomenon. Using a DSGE model, this paper studies the macroeconomic effects of public investment accounting for migrant workers. It finds that when the government uses foreign workers to build public infrastructure, the impact short-run (long-run) national income multiplier is 0.41 (0.69), compared to 0.55 (0.89) when using domestic workers. The use of foreign workers also lowers long-run output multiplier slightly. Because of the assumption that all foreign workers are rule-of-thumb and domestic workers are forward-looking with financial market access, the short-run output multipliers are slightly bigger with foreign workers than with domestic workers as consumption are crowded out by less. Sensitivity analysis finds that when the output elasticity with respect to public capital is lowered from 0.1 (the baseline case) to 0.05, the long-run cumulative output multiplier can be below 1 with foreign workers.