Estimation of Differential Employment Multipliers in a Small Regional Economy.

Estimates of regional employment multipliers provide a rough but useful means of assessing the total employment impact of gains or losses in 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 installation, a non manufacturing defense base, and private export industries are distinguished as in dependent 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 defense closings and reductions. In a national economy with a high degree of regional specialization the income level or growth of a particular region is dependent on its ability to export goods and services to other regions. Economic base analysis stresses the distinction between "export" activities, which are considered to be exogenously determined, and non-export activities, which are the endogenous component of total economic activity.