1. A private sector employer expands and hires an additional employee at $100K.
2. The government expands and hires an additional employee at $100K.
Questions
1. What is the net growth in jobs? 0, 1, or 2
2. What is the net growth in the economy? $0, $100K, or $200K
My answers are 2 and $0 respectively.
Tom: I basically agree with your arithmetic.
ReplyDeleteIn terms of jobs, I might say 2+, since the spending of each $100K earner is surely enough to support some fraction of other new jobs in the economy.
In terms of growth in the economy, my guess is that it's probably approximately 0 but possibly <0, since the taxes paid by and other growth attributable to the 2+ jobs created might not cover the $100K government job.