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Robustness of econometrically estimated local multipliers across different methods and data

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  • Jasper Jacob Van Dijk

Abstract

Local traded†goods employment multiplier estimates play an important role in the decision making of local policy makers. Therefore, it is important to understand the robustness of the approaches and quality of the data used in empirical studies. The local employment multiplier estimates by Moretti (AER; 2010) are a good benchmark for departure. In this paper, I find the traded†goods multiplier falls within the range of 1.17 to 1.93, which is substantially lower than the estimate of 2.6 obtained by Moretti. I use multiple estimators in combination with two data sets, a range of controls and different ways of classifying traded industries to show the robustness and variability of local employment multiplier estimates. Finally, I demonstrate the sensitivity of Moretti's results. The most notable result being that Moretti's multiplier for separate skilled or unskilled workers in the nontraded sector is overestimated by a factor of 2.

Suggested Citation

  • Jasper Jacob Van Dijk, 2018. "Robustness of econometrically estimated local multipliers across different methods and data," Journal of Regional Science, Wiley Blackwell, vol. 58(2), pages 281-294, March.
    • Handle: RePEc:bla:jregsc:v:58:y:2018:i:2:p:281-294
    DOI: 10.1111/jors.12378
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    Cited by:

    1. Kemeny, Tom & Osman, Taner, 2018. "The wider impacts of high-technology employment: Evidence from U.S. cities," Research Policy, Elsevier, vol. 47(9), pages 1729-1740.
    2. Rajbhandari, Isha & Faggian, Alessandra & Partridge, Mark D., 2022. "Oil and gas boomtowns and occupations: What types of jobs are created?," Energy Economics, Elsevier, vol. 115(C).
    3. Nigel Driffield & Katiuscia Lavoratori & Yama Temouri, 2021. "Inward investment and UK productivity," Working Papers 014, The Productivity Institute.
    4. Vinzent Ostermeyer, 2023. "Local multipliers and the growth of services: evidence from late nineteenth century USA, Great Britain,and Sweden," European Review of Economic History, European Historical Economics Society, vol. 27(1), pages 70-90.
    5. Gutierrez-Posada, Diana & Kitsos, Tasos & Nathan, Max & Nuccio, Massimiliano, 2021. "Do Creative Industries Generate Multiplier Effects? Evidence from UK Cities, 1997-2018," SocArXiv xs8zg, Center for Open Science.
    6. Taner Osman & Tom Kemeny, 2022. "Local job multipliers revisited," Journal of Regional Science, Wiley Blackwell, vol. 62(1), pages 150-170, January.
    7. Choi, Kyungsoo, 2022. "Job creation during Korea's transition to a knowledge economy," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 44(3), pages 75-99.
    8. Philippe Frocrain & Pierre-Noël Giraud, 2018. "The Evolution of Tradable and Non Tradable Employment: Evidence from France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 503-504, pages 97-107.
    9. Daria Denti, 2022. "Looking ahead in anger: The effects of foreign migration on youth resentment in England," Journal of Regional Science, Wiley Blackwell, vol. 62(2), pages 578-603, March.
    10. Philippe Frocrain & Pierre-Noël Giraud, 2019. "The Evolution of Tradable and Non Tradable Employment: Evidence from France," Post-Print hal-01981428, HAL.
    11. Watson, Brett & Reimer, Matthew N. & Guettabi, Mouhcine & Haynie, Alan, 2021. "Commercial fisheries & local economies," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
    12. Oriane Lafuente-Sampietro, 2021. "The multiplier effect of convertible local currencies : case study on two French schemes," Working Papers halshs-03324625, HAL.

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