Qualitative employment multipliers for Belgium, results for 2000 and 2002 [ Article 2007121003 - 10/12/2007]

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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.