Estimation of Differential Employment Multipliers in a Small Regional Economy

Abstract

Estimates of regional employment multipliers provide a rough but useful means of assessing the total employment impact of gains or losses in a region’s export activity. In this paper a partially disaggregated economic base multiplier model is described, whereby it is possible, under certain conditions, to derive differential multiplier estimates for distinct sectors of export activity. Then the model is applied to a case study of the Portsmouth, New Hampshire, economy, where a large military manufacturing in-stallation, a non-manufacturing defence base and private export industries are distinguished as independent export activities. Differential multipliers for these three export sectors are estimated. The relative magnitudes of the differential multipliers derived in this case study may be of interest to planners in many United States communities which must face the challenge of defence closings and reductions.¹