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Economic complexity and local employment multipliers

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  • Queiroz, Arthur Ribeiro
  • Freitas, Elton Eduardo
  • Romero, João Prates

Abstract

The objective of this paper is to assess the heterogeneity of employment multipliers between regions and sectors of distinct complexity levels, segmenting regions into four complexity levels and the economy into two sectors: complex and non-complex. Formal labor market data from 558 Brazilian micro-regions in three time points (2009, 2014 and 2019) were used in the investigation. Potential endogeneity was addressed by employing shift-share instrumental variables.. In less complex regions, the complex sector exhibits statistically weaker effects on both the non-complex sector and on itself, while the strongest positive impacts on employment arise from the non-complex sector’s self-multiplication, ranging from 0.92 to 1.8. In more complex regions, the complex sector presents the highest employment multiplier, generating between 1.06 and 1.43 jobs within itself and between 1.71 and 3.25 jobs in the non-complex sector.

Suggested Citation

  • Queiroz, Arthur Ribeiro & Freitas, Elton Eduardo & Romero, João Prates, 2026. "Economic complexity and local employment multipliers," Structural Change and Economic Dynamics, Elsevier, vol. 76(C), pages 20-43.
    • Handle: RePEc:eee:streco:v:76:y:2026:i:c:p:20-43
    DOI: 10.1016/j.strueco.2025.11.005
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