An Evaluation of Alternative Strategies for Incorporating Interindustry Relationships into a Regional Employment Forecasting Model

Alternative strategies for incorporating interindustry relationships into industry employment forecasting equations are evaluated. Strategies that are based on using input-output information to select which industry employment variables to include as independent variables in each equation are compared to those of including input-output-based aggregate demand variables. The strategies also differ according to the degree of endogeneity between industry employment levels, whether model selection procedures are used, and whether restrictions are placed upon the coefficients during estimation. Relative forecast performance of the alternative models and an examination of the employment multipliers serve as criteria in the evaluation of the models.