Analysis of Regional Multiplier of Knowledge Intensive Industries and Creative Jobs based on Economic Base Model: Benefit of Municipal Collaboration

Author Name NAKAMURA Ryohei (Faculty Fellow, RIETI)
Creation Date/NO. October 2019 19-P-025
Research Project Innovation Enhancing Regional Economic Structure and Evolution of Cities
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The traditional economic base model in the field of regional science contributes to identifying regional income producing industries and labor absorption. The economic base model has some conditional assumptions while it is quite tractable.

Recently, papers by Moretti and others show significant regional multiplier effects of innovative jobs. They refocused on the traditional economic base model. However, their approach has several deficiencies concerning the identification of basic/non-basic industries and ambiguity of multiplier generating mechanisms.

This paper focuses on regional specialization of knowledge intensive industries and creative jobs which are the driving forces of regional development in the framework of the economic base model. The estimations of regional economic multiplier in terms of employment are carried out using two-digit employment and three-digit job classification data at local municipality level with two-period data. Using these data, I explain regional differences by degree of specialization of knowledge intensive industries and creative workers. By doing this, I propose contemporary regional economic policy. Furthermore, by comparing multiplier effects at local municipality level and regional employment area level, benefits of municipal consolidation are shown.