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Capital Investment and Employment in the Information Sector


  • T. Randolph Beard
  • George Ford
  • Hyeongwoo Kim


Estimation of the employment effects of changes in capital investment is a standard tool in public policy debates. Typically, such predictions are based on employment multipliers derived from Input-Output analysis. In this paper, we measure the employment effects of changes in capital investment in the U.S. information sector by econometrically estimating an ¡°employment multiplier¡± from historical data. The estimated multiplier is 10 information sector jobs for each million dollars in expenditure, and perhaps 24 new jobs per million dollars invested across the entire economy. Employment multipliers derived from the Input-Output methodology average about 16 jobs per million, but the multiplier includes jobs outside the information sector. Including employment spillovers, our estimates suggest the multipliers from Input-Output models are plausible. We also note that information sector jobs have substantially higher median earnings than the private sector average, so the economic significance of changes in information sector employment are greater than might first appear. Our findings may be useful in debates over changes in industry regulation that could affect investment.

Suggested Citation

  • T. Randolph Beard & George Ford & Hyeongwoo Kim, 2013. "Capital Investment and Employment in the Information Sector," Auburn Economics Working Paper Series auwp2013-14, Department of Economics, Auburn University.
  • Handle: RePEc:abn:wpaper:auwp2013-14

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    References listed on IDEAS

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    More about this item


    CAPEX; Investment; Employment; Information Sector; Job Multiplier;

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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