<p>Do the effects of local fiscal multipliers vary based on the type of government purchases? We find that government purchases of services generate larger increases in local employment, labor income, and output than purchases of goods. This variation stems from key factors: differences in sectoral characteristics—particularly centrality and markups—between good-producing and service-producing industries, and distinct impacts on business turnover and productivity. Service purchases generate larger aggregate productivity gains than goods purchases because firm turnover is concentrated in high-growth sectors, suggesting that extensive-margin reallocation and productivity improvements amplify fiscal responses more strongly for services. Our results highlight that fiscal policy effectiveness depends not only on scale but also on the composition of spending, with important implications for the design of government purchase programs.</p>