REGIONAL MULTIPLIER EFFECTS IN THE U.K. 1

Abstract

tional Treasury pound is devoted to road building in a particular region, what happens to inoome and employment in that region? If an unemployed man leaves a region to seek work elsewhere, so that his Unemployment Benefit and/or National Assistance ceases to be spent in that region, what happens to regional income? To answer these, and many other questions, it is obvious that regional multipliers are required. If we had regional income and trade accounts, we should estimate the multipliers in the ordinary ways—whioh present problems enough; but we do not have this data. In this paper, after a brief discussion of some regional problems, I discuss the range of possible values for regional multipliers and the results of an attempt to estimate a Tninimmn value below which the multiplier for any region could not lie. This, if it were successful, would have the effect of narrowing a little the range of values that one might plausibly guess. I t is unfortunately not possible to estimate a maximum by analogous means, but it is possible to suggest a relatively cheap method of improving the estimate for any given region. Alternative procedures are discussed in Section HE, and Section IV contains conclusion and comment. It turns out that, in spite of the absence of good estimates, it is possible to show that the change in a region's income due to one pound of Treasury expenditure of the public works type is in all probability less than one pound. I t also appears, using minimum estimates, that the number of emigrants from a region sufficient to cause one more man to lose his job does not exceed seven: the true figure might be substantially lower. Furthermore, migration into a region to meet excess demand for labour certainly does not reduce it on a one-for-one basis, and may actually increase it. These results are, of course, due to induced expenditure effects, which appear to have been somewhat neglected in recent discussion of the problems of regional policy. 1 This study owes its origins mainly to the stimulus provided by Dr. B. A. Corry, to whom I am greatly indebted. Research assistance has been provided by the Economic Research

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