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Publications Jun 2017

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Cities, Industrialization, and Job Creation: Evidence from Emerging Economies


In this paper, the authors estimate multipliers of jobs in the tradable sector on non-tradable employment in cities in Brazil, China, India, Mexico, and South Africa. Building on an emerging literature on local labour multipliers, they show that average multipliers in emerging economies are smaller relative to existing estimates for the United States, while the multiplier for skilled jobs is 6 to 9 times larger both according to simple OLS estimates and when using an instrumental variable strategy that exploit nation-wide changes in employment and initial cross-city industry specialization. While there is growing concern that the manufacturing sector is not absorbing as many workers as it once did, the paper's authors document that its indirect impact on service employment is substantial. They further conclude that emerging economies can generate significantly more jobs in the nontradable sector by shifting towards more skill-intensive production.


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Carl Benedikt Frey
Chinchih Chen
Thor Berger

Type: Academic Publication