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 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).

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    $\begingroup$ @nominallyrigid pretty much by definition, it would account for all externalities $\endgroup$
    – 410 gone
    Dec 20, 2014 at 9:03
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    $\begingroup$ Politicians would definitely top the list. Not sure at which end, though. $\endgroup$ Dec 20, 2014 at 12:10
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    $\begingroup$ @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. $\endgroup$ Dec 20, 2014 at 18:03
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    $\begingroup$ @nominallyrigid Given that workers cannot change occupations at will, I expect that wages do not relate of labor productivity in a meaningful way. $\endgroup$ Dec 30, 2014 at 14:12
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    $\begingroup$ brookings.edu/~/media/Projects/BPEA/1994-1/… tl;dr: even in a single sector, in a single country, we realy don't have a clue. $\endgroup$
    – VicAche
    May 25, 2015 at 18:13

1 Answer 1


Enrico 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:

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.

  • $\begingroup$ 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. $\endgroup$
    – D J Sims
    Feb 21, 2016 at 10:42
  • $\begingroup$ 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). $\endgroup$
    – emeryville
    Feb 21, 2016 at 19:52
  • $\begingroup$ But the multiplier doesnt distinguish between real and useless output. $\endgroup$
    – D J Sims
    Feb 21, 2016 at 19:55
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    $\begingroup$ What do you mean by "useless output"? Please let me remind you that opinion should be backed up with facts and references. $\endgroup$
    – emeryville
    Feb 21, 2016 at 20:27
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    $\begingroup$ Wow. Just wow. Have you considered migrating to skeptics OR worldbuilding? $\endgroup$
    – Giskard
    Feb 21, 2016 at 20:35

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