THE IMPACT OF SPECIFIC‐SECTOR CHANGES IN EMPLOYMENT ON ECONOMIC GROWTH, LABOR MARKET PERFORMANCE AND MIGRATION

Harvey Cutler and Stephen Davies

Journal of Regional Science, 2007, vol. 47, issue 5, 935-963

Abstract: ABSTRACT It is common in empirical regional economics to use total employment as an explanatory variable while investigating issues such as the level and distribution of income and migration. This paper argues that sector‐specific changes in employment and labor market performance can have different effects on economic growth, the collection of tax revenue, migration, and the level and distribution of household income. As such, it is important to model sectors separately. We find that expansions in employment opportunities for a high‐wage sector such as computer manufacturing or bioengineering, a medium‐wage sector manufacturing, and the lower‐wage sector of retailing have differing economic consequences for a small city. We use a data intensive computable general equilibrium model to obtain these results.

Date: 2007
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