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Qualitative employment multipliers for Belgium, results for 2000 and 2002 (10/12/2007)

This paper introduces the notion of qualitative employment  multipliers. For each final demand product, a set of  employment multipliers was computed. Each of these  gives the  use of an employment type characterised by  gender, age class, professional status, education level  or labour regime. The paper describes a method for  compiling qualitative employment multipliers and shows  results based on disaggregated employment and input  output data for 2000 and 2002.

Employment multipliers give the direct and indirect  employment generation of final demand expenditures.  The indirect employment is generated by the chain of  suppliers to the firms that directly produce goods and  services for final consumption, exports or investments.  Qualitative employment multipliers provide a link between  final demand products and disaggregated employment  data at the industry level. This involves homogenising  employment data, for which few methods  have been put forward in the literature. In the paper,  this is done using industry technology. We argue that it  is impractical and less appropriate to homogenise disaggregated  employment data using commodity technology,  but draw no definitive conclusions on this matter.

The paper includes total employment multiplier results  for Belgium. An example is the case of manufacturing in  2000. While only 16% of all workers were employed in  manufacturing, final demand for manufactured goods  was responsible for 24% of cumulated employment. The  cumulative employment approach reallocates all indirect  employment towards the final demand products  that use it. What is allocated to manufactured goods is  deducted from other products, since total cumulated  employment equals total employment.

The 24% of employment generation is still low compared  to the 38% share for manufactured goods in final  demand. This is due to the high level of capital intensity  of the  ndustrial production process, resulting in a low  absolute employment multiplier of manufacturing. A  million euro of final demand expenditure on manufactured  goods lead to the cumulated employment of 7.7  persons, while for final demand in general this was 12  persons.

In qualitative terms, final demand for manufactured  goods generated 30% of (cumulated) male employment  and 28% of low-skilled employment, but only 17% of female  employment and 14% of part-time cumulative employment.  The low share of part-time workers in manufacturing  already partly explains its low absolute  employment multiplier.  The paper proposes three, more developed, descriptive  uses of qualitative employment multipliers. In the first,  qualitative employment multipliers are used to identify  the final demand products that generate the most  low-skilled employment. We found that 10 goods or services,  representing only 6.3% of total final demand were  responsible for 17.1% of the cumulated low-skilled employment.

The second application is in the context of the technology-  skills literature. Qualitative employment multipliers  are a good measure for testing the relation between the  production of new goods and services (such as ICT) and  the use of high-skilled labour. The technology–skills literature  expects this relation to be positive. We found  that in 2000, 34% of  cumulative employment generated  by final demand for ICT goods was tertiary schooled.  For ICT services this was 40%. For non-ICT goods and  services these figures were  own to 22% and 35% respectively.  Still, a million euro spent on ICT services  generates less tertiary schooled employment than does  a million spent on non-ICT services.

In the third application, employment multipliers were  generated for the major components of final demand  based on the product composition of these  components.  Our results  confirm predictions derived from trade theory  that Belgian exports use less (cumulative) employment  than consumption and investment. Thus the famous  Leontief Paradox did not arise for Belgium in  2000. As for the use of high-skilled labour, a new paradox  did arise though, because it was government consumption  - which faces the least  international competition  - that made the most intensive use of tertiary  schooled workers. 

With its final demand share of 16.2%, government consumption  was responsible for 26.5% of cumulative employment  generation and as much as 40% of tertiary  schooled employment in 2000. Most of this 40% was  generated by education services (47%), followed by social  work services (28%). The low employment multipliers  for exports  ranslated their final demand share of  45% into a cumulated employment share of 33% in 2000.  Their cumulative employment share of tertiary  schooled workers was limited to  28%.

Finally, the paper shows some of these results for 2002  and discusses the updating of qualitative employment  multipliers.

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