Local employment multipliers in U.S. cities

Abstract

In this article, I show that within a U.S. city there is a significant effect of a permanent shock to employment in the tradable sector on employment in the non-tradable sector. I find that each additional job in the tradable sector will result in between 1.6 and 1.7 new jobs in the non-tradable sector. This result is robust to the specification of sector growth in the regression model. When I split the tradable sector into high- and low-wage workers, I find a larger multiplier of 2.0–2.3 for high-wage workers and no significant multiplier for low-wage workers.