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Local Employment Multipliers in U.S. cities

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  • Jasper van Dijk

Abstract

This paper shows that within a regional economy, employment in the nontradable sector benefits from attracting jobs in the tradable sector. I rework Moretti's study of U.S. cities (AER 2010) and find that one new job in a given city's tradable sector will result into 1.02 new jobs in the nontradable sector in the same city. I show Moretti overestimated the size of this local multiplier by 0.57, because he made five perfunctory assumptions that had a major impact on his results. Subsequently I show that Moretti's assertion that skilled tradable jobs have a larger multiplier than unskilled tradable jobs is not supported by the data. The evidence provided by Moretti was only significant due to an endogeneity effect.

Suggested Citation

  • Jasper van Dijk, 2014. "Local Employment Multipliers in U.S. cities," Economics Series Working Papers 730, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:730
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    References listed on IDEAS

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    1. Enrico Moretti, 2010. "Local Multipliers," American Economic Review, American Economic Association, vol. 100(2), pages 373-377, May.
    2. Faggio, Giulia & Overman, Henry, 2014. "The effect of public sector employment on local labour markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 91-107.
    3. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    4. Enrico Moretti & Per Thulin, 2013. "Local multipliers and human capital in the United States and Sweden," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 339-362, February.
    5. J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
    6. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2008. "Identifying Agglomeration Spillovers: Evidence from Million Dollar Plants," Working Paper series 36_08, Rimini Centre for Economic Analysis.
    7. Andrew M. Isserman, 1975. ""Regional Employment Multiplier: A New Approach": Comment," Land Economics, University of Wisconsin Press, vol. 51(3), pages 290-293.
    8. G. de Blasio & C. Menon, 2011. "Local Effects of Manufacturing Employment Growth in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 70(3), pages 101-112, December.
    9. repec:rim:rimwps:36-08 is not listed on IDEAS
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    Cited by:

    1. Ron Martin & Peter Sunley & Peter Tyler & Ben Gardiner, 2016. "Editor's choice Divergent cities in post-industrial Britain," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 9(2), pages 269-299.
    2. Ting Wang & Areendam Chanda, 2016. "Manufacturing Growth and Local Multipliers in China," Departmental Working Papers 2016-02, Department of Economics, Louisiana State University.
    3. Jasper van Dijk, 2015. "Investing in lagging regions is efficient: a local multipliers analysis of U.S. cities," ERSA conference papers ersa15p146, European Regional Science Association.
    4. Jasper van Dijk, 2016. "Investing In Lagging Regions Is Efficient: A Local Multipliers Analysis Of U.S. Cities," Economics Series Working Papers 776, University of Oxford, Department of Economics.

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    More about this item

    Keywords

    Local labour market; multiplier; tradable; nontradable;
    All these keywords.

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