The Net Effects of Large Plant Locations and Expansions on County Employment

31 Pages Posted: 23 Jul 2004

See all articles by Kelly D. Edmiston

Kelly D. Edmiston

Federal Reserve Bank of Kansas City

Abstract

This paper argues that the net economic impact of new firm locations or expansions is determined by a multitude of opposing forces. Using a unique database, I set out to evaluate the net effects of these opposing forces by looking at the net change in local employment and population arising from large (greater than 300 new jobs) firm locations or expansions in the State of Georgia. The analysis suggests that the employment multipliers associated with new firm locations are much less than one; that is, the net employment effect of a large firm opening is smaller than the gross employment impact. This result is consistent with other empirical economic impact studies, which find multipliers much smaller than those of typical input-output models, often less than unity, and a previous study showing little net effect of large plant openings. Expansions of existing establishments are shown to have substantial multiplicative effects, however, with an average employment multiplier of 2.0. I discuss possible reasons for differential impacts across new and expanding firms, focusing on the nature of the firms. Differences in net impact across industries and high-tech versus low-tech firms also is evaluated. I find that the impact of large firm locations or expansions on population in the resident county generally is negative, but positive for the broader region encompassing the county of location and its contiguous neighbors.

Suggested Citation

Edmiston, Kelly D., The Net Effects of Large Plant Locations and Expansions on County Employment. Journal of Regional Science, Vol. 44, No. 2, pp. 289-320, May 2004. Available at SSRN: https://ssrn.com/abstract=565098

Kelly D. Edmiston (Contact Author)

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
29
Abstract Views
786
PlumX Metrics