The employment serving the local market in a region is made up of two parts:

1. Employment which is a function of the size of the local economy; e.g., employment in local supermarkets
   (Size-Related Local-Market-Serving Employment)
2. Employment which is a function of the rate of growth of the local economy; e.g., employment in the construction of housing.
   (Growth-Related Local-Market-Serving Employment)

Growth-related employment can give rise to fluctuations in employment because it augments temporarily an increase in basic employment, but must decline if basic employment stops growing. The dynamical character of regional employment can be expressed in terms of a mathematical model. Let B_n, L_n, and T_n be basic, local-market-serving and total employment in year n.

B_n + L_n = T_n

Local-market-serving employment is made of the size related component, SL, and the growth-related component, GL. The relations that determine SL and GL are:

SL_n = bT_n
GL_n = a[T_n-1 - T_n-2]

where b and a are parameters. This model has growth-related employment depending upon past growth. This should be interpreted as reflecting that builders must use past growth as a predictor of future growth.