Local Employment Multipliers in U.S. cities

Jasper van Dijk

No 730, Economics Series Working Papers from University of Oxford, Department of Economics

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.

Keywords: Local labour market; multiplier; tradable; nontradable (search for similar items in EconPapers)
Date: 2014-11-03
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (4)

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