This paper studies the long-run local labor market effects of the publicly financed construction of large manufacturing facilities during World War II. I focus on a subset of large, new plants on which the military was not able to incentivize private firms to stake any capital and that likely would not have been built if not for the war.I compare recipient counties to counties that were similar but for conditions engendered by the war. After establishing an absence of pre-trends across a number of outcomes, I show that recipient counties experienced a large post-reconversion boost in manufacturing employment and wages that persisted for several decades. I show how these effects impact broader labor market outcomes in the post-war period and discuss methods for distinguishing between causal mechanisms using plant-level data.
Is infrastructure construction an effective way to boost employment in distressed local labor markets? I use new geographically detailed data on highway construction funded by the American Recovery and Reinvestment Act to study the relationship between construction work and local employment growth. I show that the method for allocating funds across space facilitates a plausible selection-on-observables strategy. However, I find a precisely estimated zero effect of spending on road construction employment—or other employment—in the locale of the construction site. Reported data on vendors reveal this is because the majority of contractors—selected by competitive bidding—commute from other local labor markets. I also find no robust effect in the locales of the contractors’ offices, but argue that this source of variation does not capture an economically meaningful local demand shock. I conclude that infrastructure construction is not effective as a way to stimulate local labor markets in the short run so long as projects are allocated by competitive bidding.
Contingent work has grown rapidly in the U.S. in recent years, but the sources of this growth remain largely unknown. We use longitudinally linked tax data combining individual returns (1040s) and firm-issued information returns on both non-employment labor earnings (1099s) and employment earnings (W-2s) to study how individuals and households transition into and out of alternative work. We document pathways leading both individuals and firms into alternative work arrangements and examine whether tax policy may have contributed to these changes.