Enter the direct, indirect, and induced employment numbers into the calculator to determine the employment multiplier. This calculator helps to understand the total employment impact of a business or industry within an economy.
Employment Multiplier Formula
The following formula is used to calculate the employment multiplier.
EM = (DE + IE + IE) / DE
Variables:
- EM is the employment multiplier
- DE is the direct employment
- IE is the indirect employment
- IE is the induced employment
To calculate the employment multiplier, sum the direct, indirect, and induced employment and then divide by the direct employment.
What is an Employment Multiplier?
An employment multiplier measures the total employment impact that an industry or business has on the economy. It accounts for not only the direct jobs created by the business but also the indirect jobs created through the supply chain and the induced jobs created by the spending of those employed directly or indirectly. This metric is useful for policymakers and economists to assess the broader economic implications of a business or industry.
How to Calculate Employment Multiplier?
The following steps outline how to calculate the Employment Multiplier.
- First, determine the direct employment (DE) created by the business or industry.
- Next, determine the indirect employment (IE) created through the supply chain.
- Then, determine the induced employment (IE) created by the spending of those employed directly or indirectly.
- Use the formula from above = EM = (DE + IE + IE) / DE.
- Finally, calculate the Employment Multiplier (EM).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Direct Employment (DE) = 100 jobs
Indirect Employment (IE) = 50 jobs
Induced Employment (IE) = 30 jobs
