Place-Specific Economic Base Multipliers

Abstract

There is now wide realization that US nonmetropolitan areas are remarkably heterogeneous. Consequently the estimation of employment multipliers should address the diverse attributes and settings of these regions. In response, in this paper we outline a means for estimating cross-sectional economic base multipliers that vary from one place to another. Multipliers of this sort can be used to assess the impacts of new projects but should not be used to forecast growth. The discussion focuses on America's micropolitan counties, which are those significant urban clusters located outside of the nation's metropolitan areas. The multiplier estimates account for numerous contextual conditions of both the natural and human-created variety. All estimates are made from employment data pooled across the 1980, 1990, and 2000 censuses. Micropolitan counties with high human capital, low specialization, abundant natural amenities, and isolated locations have relatively more local employment and therefore larger multipliers.