Analysis of the incidence of public spending on employment and imports in Argentina during 2005-2015

Abstract

The paper analyzes the incidence of current public spending on employment and imports in Argentina during 2005-2015 based on an input-output analysis. In this period, employment and intermediate imports induced by Argentine public spending increased by a much higher magnitude than in other countries, converging to similar relative values to European countries with higher incomes. From a structural decomposition analysis, we find that the most important source of the increase in employment and intermediate imports was the level of government spending. However, the period coincides with major changes in the distribution of spending by purpose and the effect of these changes was to reduce the level of induced employment and increase the level of induced intermediate imports. An analysis of the cost in foreign currency per job confirms that this effect is directly associated with the increase in the importance of spending on “Economic Services”.

Date of presentation: 05-24-2021

Date of approval: 04-26-2022

JEL classification: C67, E62, H50, O23