<p><a href="http://eml.berkeley.edu//~moretti/" rel="nofollow">Enrico Moretti</a> (U.C. Berkeley) works on a related question: The multiplier effect. He finds that high tech industries have the largest multiplier. For each new high-tech job in a city, five additional jobs are created outside high-tech in that city over the next 10 years.</p>

<ul>
<li>Moretti E. Local multipliers. American Economic Review 2010;100:1-7.</li>
<li>Moretti E. Local labor markets. In: Ashenfelter O, Card D E, editors. Handbook of Labor Economics. Amsterdam, The Netherlands: Elsevier; 2011.</li>
<li>Moretti, E. and P. Thulin, Local multipliers and human capital in the United States and Sweden, Ind Corp Change (2013) 22 (1): 339-362.</li>
</ul>

<p>A quote from his book, <a href="http://eml.berkeley.edu//~moretti/book.htm" rel="nofollow">The New Geography of Jobs</a>:</p>

<blockquote>
  <p>With only a fraction of the jobs, the innovation sector generates a
  disproportionate number of additional local jobs and therefore
  profoundly shapes the local economy. A healthy traded sector benefits
  the local economy directly, as it generates well-paid jobs, and
  indirectly as it creates additional jobs in the non-traded sector.
  What is truly remarkable is that this indirect effect o the local
  economy is much larger than the direct effect. My research, based on
  an analysis of 11 million American workers in 320 metropolitan areas,
  shows that for each new high-tech job in a metropolitan area, five
  additional local jobs are created outside of high tech in the long
  run.</p>
  
  <p>[And] it gets even more interesting. These five jobs benefit a diverse
  set of workers. Two of the jobs created by the multiplier effect are
  professional jobs—doctors and lawyers—while the other three benefit
  workers in nonprofessional occupations—waiters and store clerks. Take
  Apple, for example. It employs 12,000 workers in Cupertino. Through
  the multiplier effect, however, the company generates more than 60,000
  additional service jobs in the entire metropolitan area, of which
  36,000 are unskilled and 24,000 are skilled. Incredibly, this means
  that the main effect of Apple on the region’s employment is on jobs
  outside of high tech.</p>
</blockquote>

<p>There is also a Wikipedia page on the <a href="https://en.wikipedia.org/wiki/Local_multiplier_effect" rel="nofollow">Local multiplier effect</a>.</p>

CC BY-SA 3.0
2016-02-21T10:42:30.577Z
That doesn't show that the professions create meaningful value. You can raise GDP by hiring lawyers to sue someone, and see the multiplier effects you describe as they hire office staff, but this doesn't reflect real output.
D J Sims
CC BY-SA 3.0
2016-02-21T19:52:12.760Z
I am not familiar with this occupation, but I assume that lawyers also consume goods and services, which affect real output (if its your variable of interest).
emeryville
CC BY-SA 3.0
2016-02-21T19:55:08.120Z
But the multiplier doesnt distinguish between real and useless output.
D J Sims
CC BY-SA 3.0
2016-02-21T20:27:10.197Z
What do you mean by "useless output"? Please let me remind you that opinion should be backed up with facts and references.
emeryville
CC BY-SA 3.0
2016-02-21T20:28:16.740Z
There are no facts. This is economics.
D J Sims
CC BY-SA 3.0
2016-02-21T20:35:41.330Z
Wow. Just wow. Have you considered migrating to skeptics OR worldbuilding?
Giskard
CC BY-SA 3.0
2016-02-22T14:40:56.117Z
@emeryville, I was aware of regional multipliers, and was asking specifically after national ones. Both RIMS and IMPLAN offer similar tools to calculate second-order effects locally, similar to what Moretti describes, but they really only attempt to capture second order effects within small-ish constrained areas (usually county or MSA), not at the national level, and even then they focus on demand not output.
Jason Nichols
CC BY-SA 3.0
2016-02-22T17:16:47.817Z
@JasonNichols Moretti's work is based on disaggregated data but the result is more general. He shows that creating a high-tech job has a bigger national impact than creating a manufacturing job (5 vs 2 if I remember correctly). Based on these effects you can get national estimates of the "economics impacts of different professions".
emeryville
CC BY-SA 3.0
2016-02-26T09:50:33.673Z
Multipliers such as the ones the answerer gave are usually very short run, local, and don't distinguish between gross and net product. They don't really show the value added to the macroeconomy.
D J Sims
CC BY-SA 3.0
2016-02-21T09:03:13.873Z
2016-02-21T19:58:30.227Z
2016-02-21T19:58:30.227Z
emeryville
<blockquote>
  <p>Every dollar a research worker earns makes the economy \$5 better off and every dollar a finance worker makes costs the economy \$0.60</p>
</blockquote>

<p>So <a href="http://www.reddit.com/r/Economics/comments/2pouvj/every_dollar_a_worker_earns_in_a_research_field/">Reddit Economics</a> yesterday posited and later retracted the above claim, and I was wondering, in the field of econometrics, are there any guidelines for how professions impact the national economy.</p>

<p>The RIMS II and similar systems all focused on regional economies, and were largely driven by anticipated spending patterns, so consequently focused on the demand side of the equation.</p>

<p>Is there an equivalent concept for GDP based on productivity or supply? Like a worker productivity (which I know is available in aggregate for current and historical US workers) broken down by NAICS/SIC code or other industrial designation?</p>

<p>As a follow on, are there comparative studies I could reference that compare this measure across time and countries? (IE Mexican automanufacturer production post-NAFTA compared to Japanese electronic manufacturer ca ~1980).</p>

CC BY-SA 3.0
2014-12-20T07:39:52.677Z
How would an ideal measure of labor productivity differ from the wages paid to labor? (There is [very good data](http://www.bls.gov/oes/current/oessrci.htm) on that, of course.)
nominally rigid
CC BY-SA 3.0
2014-12-20T09:03:02.740Z
@nominallyrigid pretty much by definition, it would account for all externalities
410 gone
CC BY-SA 3.0
2014-12-20T12:10:52.767Z
Politicians would definitely top the list. Not sure at which end, though.
Deer Hunter
CC BY-SA 3.0
2014-12-20T18:03:35.560Z
@EnergyNumbers, I was wondering if that was the case, but if so then there's definitely no standard source of data on it (as far as I know). Comprehensively measuring the externalities from many different occupations is a very, very difficult task.
nominally rigid
CC BY-SA 3.0
2014-12-30T14:12:06.530Z
@nominallyrigid  Given that workers cannot change occupations at will, I expect that wages do not relate of labor productivity in a meaningful way.
Ian Ringrose
CC BY-SA 3.0
2015-05-25T18:13:50.473Z
http://www.brookings.edu/~/media/Projects/BPEA/1994-1/1994a_bpea_bosworth_perry_shapiro.PDF tl;dr: even in a single sector, in a single country, we realy don't have a clue.
VicAche
CC BY-SA 3.0
2015-07-17T16:30:18.080Z
Not sure if I understand your question, but I think GDP can be computed in terms of ['productivity or supply'](https://en.wikipedia.org/wiki/Gross_domestic_product#Production_approach) ?
BCLC
CC BY-SA 3.0
2015-07-17T17:22:12.990Z
@BCLC, what I was looking for was a standardized nnp by sic or something along those lines. Preferably further segmented by region, but I was open to other measures, and trying to use phrasing that would keep the question accessible to a lay audience.
Jason Nichols
<macroeconomics><econometrics>
What are the economic impacts of different professions?
Jason Nichols
# What are the economic impacts of different professions?

(Asked by: username_0 on 2014-12-20)

> Every dollar a research worker earns makes the economy \$5 better off and every dollar a finance worker makes costs the economy \$0.60

So [Reddit Economics](http://www.reddit.com/r/Economics/comments/2pouvj/every_dollar_a_worker_earns_in_a_research_field/) yesterday posited and later retracted the above claim, and I was wondering, in the field of econometrics, are there any guidelines for how professions impact the national economy.

The RIMS II and similar systems all focused on regional economies, and were largely driven by anticipated spending patterns, so consequently focused on the demand side of the equation.

Is there an equivalent concept for GDP based on productivity or supply? Like a worker productivity (which I know is available in aggregate for current and historical US workers) broken down by NAICS/SIC code or other industrial designation?

As a follow on, are there comparative studies I could reference that compare this measure across time and countries? (IE Mexican automanufacturer production post-NAFTA compared to Japanese electronic manufacturer ca ~1980).

**Tags:** macroeconomics, econometrics
> **Comments:**
> **username_1**: How would an ideal measure of labor productivity differ from the wages paid to labor? (There is [very good data](http://www.bls.gov/oes/current/oessrci.htm) on that, of course.)  
> **username_2**: @nominallyrigid pretty much by definition, it would account for all externalities  
> **username_3**: Politicians would definitely top the list. Not sure at which end, though.  
> **username_1**: @EnergyNumbers, I was wondering if that was the case, but if so then there's definitely no standard source of data on it (as far as I know). Comprehensively measuring the externalities from many different occupations is a very, very difficult task.  
> **username_4**: @nominallyrigid  Given that workers cannot change occupations at will, I expect that wages do not relate of labor productivity in a meaningful way.  
> **username_5**: http://www.brookings.edu/~/media/Projects/BPEA/1994-1/1994a_bpea_bosworth_perry_shapiro.PDF tl;dr: even in a single sector, in a single country, we realy don't have a clue.  
> **username_6**: Not sure if I understand your question, but I think GDP can be computed in terms of ['productivity or supply'](https://en.wikipedia.org/wiki/Gross_domestic_product#Production_approach) ?  
> **username_0**: @BCLC, what I was looking for was a standardized nnp by sic or something along those lines. Preferably further segmented by region, but I was open to other measures, and trying to use phrasing that would keep the question accessible to a lay audience.  

---

## 1 answers

### Answer by username_7 on 2016-02-21. Score: 2

[Enrico Moretti](http://eml.berkeley.edu//~moretti/) (U.C. Berkeley) works on a related question: The multiplier effect. He finds that high tech industries have the largest multiplier. For each new high-tech job in a city, five additional jobs are created outside high-tech in that city over the next 10 years.

* Moretti E. Local multipliers. American Economic Review 2010;100:1-7.
* Moretti E. Local labor markets. In: Ashenfelter O, Card D E, editors. Handbook of Labor Economics. Amsterdam, The Netherlands: Elsevier; 2011.
* Moretti, E. and P. Thulin, Local multipliers and human capital in the United States and Sweden, Ind Corp Change (2013) 22 (1): 339-362.

A quote from his book, [The New Geography of Jobs](http://eml.berkeley.edu//~moretti/book.htm):

> With only a fraction of the jobs, the innovation sector generates a
> disproportionate number of additional local jobs and therefore
> profoundly shapes the local economy. A healthy traded sector benefits
> the local economy directly, as it generates well-paid jobs, and
> indirectly as it creates additional jobs in the non-traded sector.
> What is truly remarkable is that this indirect effect o the local
> economy is much larger than the direct effect. My research, based on
> an analysis of 11 million American workers in 320 metropolitan areas,
> shows that for each new high-tech job in a metropolitan area, five
> additional local jobs are created outside of high tech in the long
> run.
>
> [And] it gets even more interesting. These five jobs benefit a diverse
> set of workers. Two of the jobs created by the multiplier effect are
> professional jobs—doctors and lawyers—while the other three benefit
> workers in nonprofessional occupations—waiters and store clerks. Take
> Apple, for example. It employs 12,000 workers in Cupertino. Through
> the multiplier effect, however, the company generates more than 60,000
> additional service jobs in the entire metropolitan area, of which
> 36,000 are unskilled and 24,000 are skilled. Incredibly, this means
> that the main effect of Apple on the region’s employment is on jobs
> outside of high tech.

There is also a Wikipedia page on the [Local multiplier effect](https://en.wikipedia.org/wiki/Local_multiplier_effect).

> **Comments:**
> **username_8**: That doesn't show that the professions create meaningful value. You can raise GDP by hiring lawyers to sue someone, and see the multiplier effects you describe as they hire office staff, but this doesn't reflect real output.  
> **username_7**: I am not familiar with this occupation, but I assume that lawyers also consume goods and services, which affect real output (if its your variable of interest).  
> **username_8**: But the multiplier doesnt distinguish between real and useless output.  
> **username_7**: What do you mean by "useless output"? Please let me remind you that opinion should be backed up with facts and references.  
> **username_8**: There are no facts. This is economics.  
> **username_9**: Wow. Just wow. Have you considered migrating to skeptics OR worldbuilding?  
> **username_0**: @emeryville, I was aware of regional multipliers, and was asking specifically after national ones. Both RIMS and IMPLAN offer similar tools to calculate second-order effects locally, similar to what Moretti describes, but they really only attempt to capture second order effects within small-ish constrained areas (usually county or MSA), not at the national level, and even then they focus on demand not output.  
> **username_7**: @JasonNichols Moretti's work is based on disaggregated data but the result is more general. He shows that creating a high-tech job has a bigger national impact than creating a manufacturing job (5 vs 2 if I remember correctly). Based on these effects you can get national estimates of the "economics impacts of different professions".  
> **username_8**: Multipliers such as the ones the answerer gave are usually very short run, local, and don't distinguish between gross and net product. They don't really show the value added to the macroeconomy.  

---

