The neoclassical economic base multiplier

In this paper we derive an analytical expression for the regional neoclassi cal economic base marginal employment multiplier. The model that we adopt i s a variant of the 1-2-3 general equilibrium model used in trade analysis. Its specific neoclassical characteristics are that labor supply is a positi ve function of the real consumption wage and that factor and product demand s are price sensitive. We calculate the employment multipliers associated w ith both a demand and supply stimulus to the basic sector. We demonstrate t hat it is possible for the marginal economic base multiplier to take any po sitive or negative value. However; the value of the marginal multiplier is likely to approximate the value of the conventional average multiplier the closer production and utility functions are to Cobb-Douglas specifications and the more elastic is the labor supply function.