THE DISTRIBUTIONAL AND COUNTERCYCLICAL EFFECTS OF PUBLIC CAPITAL INVESTMENT IN TRANSPORTATION INFRASTRUCTURE

• Main Author: Schendstok, Matthijs B.
• Format: Others
• Published: UKnowledge 2019
• Subjects: Infrastructure; Fiscal Policy; Income Inequality; Implementation Lags; Stabilization Policy; Income Distribution; Labor Economics; Macroeconomics; Public Economics
• Online Access: https://uknowledge.uky.edu/economics_etds/46; https://uknowledge.uky.edu/cgi/viewcontent.cgi?article=1041&context=economics_etds

While the long run productivity of federal highway infrastructure spending has been well researched, their short run effects and effects on income inequality. This dissertation explores those under-researched unconventional effects. In the first chapter, I investigate the effects of federal infrastructure grants on income inequality. I find that grants reduce inequality in both recipient and neighboring states. The reduction is driven by greater income among the bottom three income quintiles. I explore two mechanisms using person level data and find that the reduction in inequality is attributable to higher income for low-skilled workers and workers working in low-skilled industries. In the second chapter, I investigate the role of implementation lags in the ARRA. I find that the employment effects after six months were nearly twice as high in short lag counties compared to long lag counties. However, these effects quickly fade. I find no evidence of implementation lags impacting employment after one year. In the third chapter, I examine the effect of the business cycle on completion times of federally financed transportation infrastructure projects. I find that projects that begin construction during periods of economic slack are completed more quickly, suggesting an alternative mechanism for state dependent fiscal multipliers.