SITE MAP EDUCATION PAGE ECON & BUS GEOG RESOURCES A-Z INDEX

## Employment Multipliers (Economic Base)

##### (http://faculty.washington.edu/krumme/207/development/basemploy.html)

Supporting Pages:

The simple economic base (employment) multiplier is presented in three different forms, respectively emphasizing different components and roles of the multiplier Total Employment (T) = Basic Employment (B) + Nonbasic Employment (N)

Multiplier Effect (ME) = Nonbasic Employment generated (by Basic employment)
OR:
Basic employment multiplied by Nonbasic employment per basic employee
OR:
Basic Employment x Multiplier minus Basic Employment
OR:
Basic Employment x (Multiplier - 1)

### Multiplier Formulation #1

T = B + N

 TB = B+NB

 T = B (B + N)B

 T = B TB

 M1 = T B

(Multiplier: Total employment generated per basic employee)

 ME = B T B - B

### Multiplier Formulation #2

T T
T
1 1 1

=
=
=
=
B B
T
 T-N T
 TT - N T
 1 - N T

1
M2 =
 1 - N T

Denominator: "leakage coefficient" (the larger this coefficient, the smaller the multiplier)
N/T = "retention coefficient" (the larger this coefficient, the larger the multiplier). This coefficient is the equivalent of the "propensity to consume locally" (pcl) x "income generated per local consumption dollar" (iclcs) in the local income multiplier.

### Multiplier Formulation #3

T = B + ME

T = B + B
 NB

T = B (1 +
 NB
)

M3 = (1 +
 NB )

[In this formulation, the emphasis is on the N/B ratio and the role of the "1" in multipliers (namely to isolate and preserve the basic component in the resulting total employment)]

ME = B
 NB