A new look at local employment multipliers: Preliminary evidence from Spain

Abstract

Based on a recent wave of studies citing the work of Moretti (2010), this paper provides preliminary evidence as to the effects of local tradable employment upon local non-tradable employment for Spain. Using a location quotient approach for the division of basic and non-basic employment in the regional accounting database , initial evidence for the period 1995-2008 suggests a short-term (year on year) local employment multiplier effect of 1.13 jobs in the non-tradable sector as a result of the creation of 1 job in the tradable sector. For the same period the long-term multiplier as measured for the two periods 1995-2001 and 2001-2007 is almost double with 2.1 jobs being created in the non-tradable sector as a result of one job created in the tradable sector. Apart from the obvious policy implications for Spanish regional and economic development in terms of job creation, the paper adopts a rigorous approach towards obtaining a convincing or at the very least satisfactory division of basic and non-basic employment for posterior empirical estimation of a local employment multiplier. In this context, the paper grants more attention than, a priori would appear to be the case, for similar studies in this field. I consider the latter to be one of my principal contributions in this paper.