Insights
Last week we held the second in our current series of breakfast briefing webinars – Thinking through multipliers: Learning from BBC relocation. The event focused on what multipliers are and why local growth policymakers need to think about them, and included a presentation from Dr Max Nathan of UCL on some of the latest research about multipliers in local economies arising from the BBC’s (partial) relocation to Manchester.
You can watch a recording of the event on our YouTube channel’s live section.
The next two events in our breakfast briefing series will be Economic inactivity: Thinking through local responses on 26th February, and The industrial strategy: Thinking through local responses on 5th March (you can register to attend at the links provided).
This blog recaps some of the key points from our event on multipliers and why they are so useful for understanding the effects of changes in a local economy.
What are multipliers used for?
First, what are we talking about – what are multipliers? Our blog on understanding multipliers goes into this in depth, but essentially, multipliers are a concept used by economists to capture the knock-on effects of increased activity in one part of the economy, for the rest of the economy.
Multipliers look at specific economic outcomes that can be ‘multiplied’ by these knock-on effects. For example, employment multipliers look at the impact of changes in employment throughout the local economy. If a new factory is opened employing 500 people, for instance, employment multipliers can be used to estimate how many additional jobs – above that 500 – may be created because of agglomeration or increased demand in local supply chains or services.
A multiplier of 0.75 for instance would suggest 375 additional local jobs above the factory’s 500. Similarly, investment multipliers capture the impacts of investments made locally. Income multipliers capture increases in local spending power, and so on.
This may sound great – almost like a buy one get one free for local jobs – but as always it’s important to think about possible caveats and downsides. Some of these jobs may come via displacement, for instance, and lots of new jobs in an area may have negative effects on other factors like house and rental prices. Multipliers can be useful for thinking through some of these negative consequences too.
In short, multipliers are about having an estimate of the ripples that a given intervention or change will send across the local economy. They can help figure out which interventions to support or how to plan for and adjust to changes that policymakers might have no control over.
Multiply your multiplier knowledge with our resources
Apart from our blog on understanding multipliers, and our toolkit on local (employment) multipliers, you can also read our blog that goes into the history of multipliers as a concept, and this blog which summarises some of the technical details of our toolkit.
Our evidence briefing on public sector relocation goes into more detail about how to think about policies such as the BBC relocation, and gives guidance on how to use multiplier figures to get an estimate of local employment impacts.
We will also be publishing soon a new toolkit on local income multipliers, so keep an eye on our resource library, or subscribe to our newsletter to know when that is available.
