Regional job multipliers

ABSTRACT

Job multipliers are often cited as justification for economic development incentives in particular industries. In this article, we use Quarterly Census of Employment and Wages data for counties in the State of Ohio to estimate the tradable sector’s job multiplier. We find that for each additional job in the tradable sector over a 10-year period, there are 1.6 jobs created in the nontradable sector. This multiplier estimate is lower for shorter periods of 1 year and 3 years. For the manufacturing sector specifically, we find the multiplier effect to be 1.2 jobs in the nontradable sector over a 10-year period. We also provide evidence that the multiplier varies over time. During the recessionary period of 2008 and 2009, the multiplier appears lower compared to the time period preceding and proceeding the recession.

KEYWORDS:

• Jobs multiplier
• economic development
• public policy

JEL CLASSIFICATION:

• J20
• O20
• R11

Acknowledgements

The authors would like to thank Enrico Moretti, as well as researchers at the Economics Center.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ NAICS Codes: 21, 23, and 31–33, respectively.

² Note that the tradable sector is more broadly defined in this article. When the manufacturing sector is used, the jobs multiplier is lower.