Jobs and Distributive Effects of Infrastructure Investment : The Case of Argentina
This paper assesses the short-term job generation potential of infrastructure investments in Argentina. The analysis is based on a 2017 Input-Output model with a breakdown of the construction sector into multiple infrastructure subsectors. The disa...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/721891623745711077/Jobs-and-Distributive-Effects-of-Infrastructure-Investment-The-Case-of-Argentina http://hdl.handle.net/10986/35850 |
| Summary: | This paper assesses the short-term job
generation potential of infrastructure investments in
Argentina. The analysis is based on a 2017 Input-Output
model with a breakdown of the construction sector into
multiple infrastructure subsectors. The disaggregation was
possible with a novel database with cost structures for
about 70 infrastructure projects. The analysis reveals
significant heterogeneity across subsectors of
infrastructure investment, with job generation potential
ranging between 15,000 and 49,000 annualized direct,
indirect and induced jobs in the short-term per US1 billion
dollars invested, depending on the type of infrastructure
project considered. The results show that public housing and
rural road maintenance, followed by railway construction,
water and sanitation and urban infrastructure have the
highest potential to generate jobs in the short-term. On the
other hand, road construction and energy distribution are
activities with lower short-term generation potential, but
with higher long-term impact on GDP growth according to
their elasticities estimates in the literature. The analysis
reveals the characteristics of the projects that are
determinants of the degree of job generation potential,
these include: labor intensity, split between skilled and
unskilled labor, ratio of imports to total investment,
technology, among others. Infrastructure investment in
sectors with high potential for employment generation
compares favorably with pure demand stimulus check programs
in terms of the effects on income growth for the poor and
across all quintiles. However, infrastructure investment in
sectors with low employment potential tend to have
relatively more limited distributive effects. It is argued
that to optimize job generation potential of infrastructure
investment in the short-term as a fiscal stimulus, and in
the long-term as a foundation for future growth,
interventions must be ready for implementation, with low
risk of delays, and selected based on sound economic
analysis. Also, policymakers must pursue projects with high
economic returns to enable a more productive and competitive
economy and look for opportunities in which public sector
investment can crowd in rather than crowd out private sector investment. |
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