Fiscal policy changes can boost employment beyond traditional methods, study finds.
The article explores how government spending and taxes can impact job creation. By studying data from OECD countries over the past 30 years, the researchers found that fiscal policy can influence employment levels beyond just boosting economic output. Specifically, increasing spending on certain items and reducing social security contributions can help create more jobs. The study confirms that Okun's Law, which relates output gaps to employment gaps, holds true in most cases. Additionally, higher subsidies and lower social security contributions can make the impact of economic downturns on job losses more severe.