%0 Journal Article %J American Economic Journal: Economic Policy %D 2012 %T Does State Fiscal Relief During Recessions Increase Employment? Evidence from the American Recovery and Reinvestment Act %A Gabriel Chodorow-Reich %A Laura Feiveson %A Zachary Liscow %A William Gui Woolston %X The American Recovery and Reinvestment Act (ARRA) of 2009 included $88 billion of aid to state governments administered through the Medicaid reimbursement process. We examine the effect of these transfers on states’ employment. Because state fiscal relief outlays are endogenous to a state’s economic environment, OLS results are biased downward. We address this problem by using a state’s prerecession Medicaid pending level to instrument for ARRA state fiscal relief. In our preferred specification, a state’s receipt of a marginal $100,000 in Medicaid outlays results in an additional 3.8 job-years, 3.2 of which are outside the government, health, and education sectors %B American Economic Journal: Economic Policy %V 4 %P 118-145 %G eng %U https://www.aeaweb.org/articles/pdf/doi/10.1257/pol.4.3.118 %N 3