Limitations of Economic Multipliers

Multiplier impacts must be interpreted with caution since they may be illusory when the economy experiences high employment and output near industry capacity. When they are reported, it is recommended that the reader be reminded of the limitations on the use of multipliers. Mindful of these limitations, this study has undertaken multiplier analysis to estimate indirect and induced employment, noting that these impacts have not been directly measured by the surveys conducted as part of the study.

The economic multipliers are derived from the 2016 Interprovincial Input-Output model, the most recent version available. Notably, the multipliers have been updated by Statistics Canada since previous economic impact studies conducted in 2016, 2012, and earlier.[1] As a result, the indirect and induced impacts calculated here for 2019 are not directly comparable to the results in prior years.

The multipliers used to calculate the indirect and induced impacts in 2019 may better represent the current structure of the Canadian economy which has become less integrated domestically and more integrated internationally, meaning that indirect and induced job impacts within Canada may be lower. It is generally expected that multiplier impacts will decrease over time. For instance, as the economy becomes more global, more spending will occur outside of Canada, leading to lower employment impacts. In addition, the updated (lower) multipliers represent increased productivity in the aviation industry. This is consistent with more global data on employment in the post global economic downturn era, as employers are seeing improvements in worker productivity.

1 For instance, the 2016 Interprovincial Input-Output model was released in November 2019 and therefore was unavailable during the 2016 study. Instead, the 2016 study refers to the multipliers derived from the 2010 Interprovincial Input-Output model, the most recent version available at the time.