Question

What do you mean by employment multiplier?

Answer 1

Employment multiplier expresses the relationship between the primary employment generated directly by an investment and the total employment resulting from it, including secondary employment caused by the spending of those initially employed. It is the ratio of total employment to primary employment. For example, if an investment directly creates 2 lakh jobs and indirectly creates 4 lakh more, the employment multiplier is 3 (6 lakh total jobs divided by 2 lakh primary jobs). This means every new job in investment industries leads to additional jobs in other sectors through increased consumption and business expansion.