The Estimation of Local Employment Multipliers for Portugal

This paper measures the size of the local employment multiplier of the “Tradable” sector on the “Non-Tradable” sector for Portugal using regional data for municipalities and NUTS3 regions in 1989, 1999, 2009, and 2019. We use several econometric estimators, including pooled OLS, random- and fixed-effects estimators, and instrumental variables estimators. The results from the various models estimated reveal a statistically significant employment multiplier ranging between 0.40 and 0.90 for NUTS3 regions and between 0.32 and 0.77 jobs for municipalities. On average, for each new 10 jobs in the “Tradable” sector, there is an increase of between 3 and 8 jobs in the “Non-Tradable” sector, across municipalities.