Degree Name

Master of Science

Department or Program



Watts, Alison


Given today’s economic conditions it is becoming more essential to gain a better understanding of long run economic development in the US. This paper seeks to find economic sectors that show a significant impact on employment and income growth. This was done by estimating the elasticities for individual sectors (Manufacturing, Trade, Information, Business Services and Finance, Health and Education, and Other) and using a growth accounting approach to determine the contributions of labor for each. Over the sample period years (2001-11) it was found that business services and finance had the highest contribution to labor growth with an average annual growth of 15.7% for total output and 6.5% for total employment. In contrast, the manufacturing sector had an average annual growth of 0.14% for total output and -2.77% for employment over the same period. In the most recent years, 2010-11, the contribution of labor accounted for 8.1% of output growth in manufacturing versus 17.5% in the business services and finance sector. This suggests that there are structural changes occurring in today’s economy, and there is benefit to long run economic planning at the local level.