Full Citation

Title: Local Multipliers, Unemployment and Migration: An Empirical Analysis of the United States

Citation Type: Conference Paper

Publication Year: 2014

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Abstract: This paper shows that within a regional economy, employment in the nontradable sector benefits from attracting jobs in the tradable sector. I rework Moretti’s study of U.S. cities (AER 2010) and find that one new job in a given city’s tradable sector will result into 1.02 new jobs in the nontradable sector in the same city. I show Moretti overestimated the size of this local multiplier by 0.57, because he made five perfunctory assumptions that had a major impact on his results. Subsequently I extend Moretti’s analysis by including the unemployment rate and migration. The size of the local multiplier increases with the unemployment rate in a city. Almost all jobs in the nontradable sector created by the local multiplier effect are fulfilled by workers that migrate from other regions, therefore local unemployment is not reduced. These findings are important for regional economic policy. They suggest that cities with a high unemployment rate will experience the greatest increase in local employment in the nontradable sector by attracting tradable industries, but their current residents are not likely to benefit from the additional jobs. Therefore it remains to be seen if policy to attract tradable firms - to boost local employment - is welfare improving.

Url: https://www.econstor.eu/bitstream/10419/124338/1/ERSA2014_00504.pdf

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Authors: van Dijk, Jasper

Conference Name: 54th Congress of the European Regional Science Association

Publisher Location: Russia

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Migration and Immigration, Population Data Science

Countries: United States