Source: World Bank project documents: Honduras - Water and Sanitation Program (P103881), Colombia - Bogota Urban Services Project (P074726), Brazil - Bahia Poor Urban Areas Integrated Dev (P081436), Argentina - Santa Fe Road Infrastructure (P099051), and Brazil - Cana Brava hydropower plant. Energy estimates are from the UNEP (2008), Peru - Rural Electrification (P090116), and Brazil - Cana Brava hydropower plant. Authors’ calculations.

With those sensitivities in mind, a “prototypical basket” of infrastructure investment<sup>13</sup> implemented in LAC weighted would generate about 40,000 new direct and indirect jobs per US$1billion spent. Even with an assumed multiplier of 2.0 for further induced employment and no crowding out or substitution effect, this would mean employment generation of about 80,000 jobs per US$1billion spent or 2 million jobs for the incremental US$25 billion so far proposed as stimulus in 2009 in the LAC region. This would represent about 7 percent of LAC’s estimated unemployed in 2009.

The estimates presented in Table 2 correspond to capital investment projects in various countries across the LAC region. There is a sub-set of infrastructure projects, which, however limited in scope, may provide the opportunity for even greater direct employment benefits. That is, rural road maintenance programs typically14 invest up to 90 percent of the total project costs in labor activities. Regional data suggest that between 200 and 500 jobs are created for every million dollar spent on these initiatives by employing unskilled workers in rural areas paid at the minimum wage.<sup>15</sup> The jobs generated from labor intensive maintenance projects would generate very few indirect jobs because of the lack of material and equipment inputs. Nevertheless, labor intensive projects coupled with well-targeted social programs may be considered a highly progressive intervention for reducing the impact of the crisis on poor rural communities.

In advising governments on the design of stimulus plans, it becomes clear that the employment story is complex and the investment decision should be made in the context of the overall objective of the government in the medium to long term. To illustrate how nuanced policy recommendation would need to be in the context of employment generation, the Diagram below illustrates the wide range of employment effects according to different renewable energy technologies and juxtaposes those effects against highway construction.

> 13 Based on proposed stimulus packages, we assumed a composition of packages as: 50% in Transport (25% in highways, 20% in urban roads, and 5% in rural roads), 30% in Electricity (25% in generation of electricity and 5% in rural electrification), and 20% in Water and Sanitation (15% in coverage expansion and 5% in treatment plants). We simulated different composition and the estimations were significantly robust.

> 14 Peru - Second Rural Roads Project (P044601) and Guatemala - Second Rural and Main Roads Project (P055085).

> 15 As with investments in assets, these numbers do not account for substitution effect.  As such, the estimates may be most applicable to economies with slack labor conditions and unemployment among day laborers and construction workers in particular.

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