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Local multiplier effect of the tradable sector on the Brazilian labor market

Author

Listed:
  • Roberta Moraes Rocha

    (PPGECON-UFPE, PPGGES-UFPE, PPGIT-UFPE)

  • Breno Caldas Araújo

    (Bacharel em Biomedicina (2010) – UFPE)

Abstract

The industrial sector has significant economic importance to the national and local economy, especially because it accounts for a significant portion of national employment and generates a multiplier effect on other economic sectors that goes beyond regional and national geographical boundaries. For these reasons, among others, the sector is often targeted by public policies to encourage regional economic growth. Based on Bartik (Bartik, T.J.: Who benefits from state and local economic development policies? W.E. Upjohn Institute for Employment Research (1991)) and Moretti (Moretti, Am. Econ. Rev. 100:1–7, 2010), using data from the demographic censuses conducted by the Brazilian Institute of Geography and Statistics (IBGE) and the Annual Report of Social Information (RAIS) tallied by the Economy Ministry for the years 1991, 2000 and 2010, we estimate the local employment multiplier of the tradable sector on the local labor market. The results indicate that for each job generated by the industrial sector, on average there is a reduction of at 2.6 unoccupied people, and 8 jobs are generated in the non-tradable sector. These results suggest that part of the multiplier effect is internalized by the local economy, since that the impact on unoccupied people is less than job creation.

Suggested Citation

  • Roberta Moraes Rocha & Breno Caldas Araújo, 2021. "Local multiplier effect of the tradable sector on the Brazilian labor market," Letters in Spatial and Resource Sciences, Springer, vol. 14(3), pages 269-286, December.
    • Handle: RePEc:spr:lsprsc:v:14:y:2021:i:3:d:10.1007_s12076-021-00278-1
    DOI: 10.1007/s12076-021-00278-1
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    References listed on IDEAS

    as
    1. Enrico Moretti, 2010. "Local Multipliers," American Economic Review, American Economic Association, vol. 100(2), pages 373-377, May.
    2. Guilherme Macedo & Leonardo Monasterio, 2016. "Local multiplier of industrial employment: Brazilian mesoregions (2000-2010)," Brazilian Journal of Political Economy, Center of Political Economy, vol. 36(4), pages 827-839.
    3. Faggio, Giulia & Overman, Henry, 2014. "The effect of public sector employment on local labour markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 91-107.
    4. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    5. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    6. Enrico Moretti & Per Thulin, 2013. "Local multipliers and human capital in the United States and Sweden," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 339-362, February.
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    More about this item

    Keywords

    Local multipliers; Industrial employment; Bartik IV; Labor market;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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