Macro-economic evaluations of the potential offered by extending community services : a brief summary

Abstract

The few existing macro-economic estimates of the potential of an extension of local services provide a convergent message : the development of local services by means of public subsidies can lead to positive effects on employment. A positive assessment is obtained via two different channels. First of all via the traditional effects of financial transfers to households or the creation of public sector jobs. Assuming, however, as is only realistic, no change in the public sector balance, these positive effects disappear. Secondly the effects of changes in the structure of household consumption, which is enriched by the provision of local services, which then provide employment benefits.

But it must be stressed that these macro-economic estimates are inevitably based upon a large number of prescriptive hypotheses which cannot but make them rather fragile in quantitative terms.