This paper presents the results of the estimation and simulation of a submodel of a multiregional econometric model which is bused on a “bottom‐up” and “supply side” approach. The equations of the service sectors follow a specification different from that usually adopted for industrial sectors, as a crucial role is given lo selfemployed labour and to labour force growth. The model has been estimated on pooled data for 12 years (1970‐1981) for the 20 Italian regions using the ordinary least square technique. The model indicates that the growth of service employment is determined not only by the growth of industrial employment and that macroeconomic policies could be adopted in order to increase employment in service activities.