Economic Impact Analysis with IMPLAN Rose M. Baker David L. Passmore
Who we are… <ul><li>Rose M. Baker </li></ul><ul><li>David L. Passmore </li></ul>Who are  you?
Your experiences & plans http://implan.questionpro.com
Your experiences & plans What you told us….
 
Our process today <ul><li>We have a lot of information. But, we don’t need to dump it all on you. </li></ul><ul><li>No tim...
For information after today
Input-Output Analysis A systematic view of production and consumption in an economy
Sex life of your regional economy < the birds & bees of job creation >
The economy is like a ball of string < complex > < intertwined > < large > < unexpected >
Way to organize data < input-output tables > Summarize production & consumption.
Input-output table ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
How is economic activity classified? <ul><li>An  industry  is a group of establishments with similar production processes ...
NAICS classifies industries <ul><li>N orth  A merican  I ndustrial  C lassification  S ystem. </li></ul><ul><li>Six-digit ...
Primary & secondary commodities <ul><li>Establishments are in industries that define their primary commodities. </li></ul>...
Simple input-output table ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
Industries  produce  goods & services ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output producers
Industries  purchase   goods & services ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output purchasers
Production sector of the economy ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
Production sector of the economy ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output interindustry t...
Production sector of the economy ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output direct requirem...
A closer look at interindustry transactions ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand purc...
A closer look at interindustry transactions ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand purc...
A closer look at interindustry transactions ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand purc...
Industry production function  -- the direct supply chain ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand tota...
Producing & purchasing continues until goods or services created ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final dem...
Consumption ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
Final demand… Gross domestic product… MDEV 6058   Penn State Management Development ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 i...
Total economic output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output production + consumption ...
Some Examples of Input-Output Tables
Here is the sex part…. < where jobs come from >
Jobs are created because… <ul><li>Total output is created by a mix of productive resources. </li></ul><ul><li>Labor is a p...
Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3...
Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3...
Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 Ind 2 ind 3...
Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3...
Occupational employment is tied to total industrial output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand t...
Occupational employment is created.. … when people  use their unique human capital to create goods &  services
Results of input-output analysis
Input-output tables are used for… <ul><li>Economic accounting </li></ul><ul><li>Forecasting </li></ul><ul><li>“ What if” s...
Local uses of input-output analysis <  producer & purchaser data >   <  multipliers >
Multiplier A product of input-output analysis
producer/purchaser data… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output producers purchasers
Multipliers <ul><li>Economic impact of change in final demand. </li></ul><ul><li>Calculated for output, income, employment...
Producing & purchasing multiplies… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand
Multipliers display three  components of change <ul><li>Direct. </li></ul><ul><li>Indirect. </li></ul><ul><li>Induced. </l...
Direct effects <ul><li>Changes in production as a result of immediate effects of a change in final demand. </li></ul><ul><...
Indirect effects <ul><li>Changes in production in industries supplying industry delivering the final product. </li></ul><u...
Induced effects <ul><li>Changes in direct and indirect production increase income and, therefore, consumption (and, maybe ...
Two types of multipliers type 1 = type 2 = direct + indirect direct direct + indirect + induced direct
Some employment multipliers
<ul><li>Input-output model, extended to social accounting. </li></ul><ul><li>Type 1 and type 2 multipliers for output, val...
Marketing waste industries <ul><li>Waste hauling and landfills are part of our highways and landscape. </li></ul><ul><li>N...
Waste/recycling multipliers  for Pennsylvania
Loss of opportunity Penn State research on: Community Costs of Technical Skills Deficits
Quick response, regional impact Penn State research: Economic & Workforce  Brief series
Economic Impact Analysis with IMPLAN Rose M. Baker David L. Passmore
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Economic Impact Analysis with Implan

  1. 1. Economic Impact Analysis with IMPLAN Rose M. Baker David L. Passmore
  2. 2. Who we are… <ul><li>Rose M. Baker </li></ul><ul><li>David L. Passmore </li></ul>Who are you?
  3. 3. Your experiences & plans http://implan.questionpro.com
  4. 4. Your experiences & plans What you told us….
  5. 6. Our process today <ul><li>We have a lot of information. But, we don’t need to dump it all on you. </li></ul><ul><li>No time pressure to do it all. </li></ul><ul><li>Bring your knowledge and experiences to the table. </li></ul><ul><li>Ask questions! Talk! Challenge! </li></ul><ul><li>A copy of all slides is provided on a web site. We will not overwhelm you with handouts. </li></ul><ul><li>Sources of information are available on a web site. </li></ul><ul><li>Breaks and lunch will occur! </li></ul>
  6. 7. For information after today
  7. 8. Input-Output Analysis A systematic view of production and consumption in an economy
  8. 9. Sex life of your regional economy < the birds & bees of job creation >
  9. 10. The economy is like a ball of string < complex > < intertwined > < large > < unexpected >
  10. 11. Way to organize data < input-output tables > Summarize production & consumption.
  11. 12. Input-output table ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
  12. 13. How is economic activity classified? <ul><li>An industry is a group of establishments with similar production processes or products. </li></ul><ul><li>An establishment is a single physical location where business is conducted. </li></ul><ul><ul><li>Industrial operations conducted or services provided. </li></ul></ul><ul><ul><li>Not to be confused with an enterprise. </li></ul></ul><ul><li>A commodity is a group of similar products. </li></ul><ul><li>Industries make and use commodities. </li></ul><ul><ul><li>Some commodities are primary products or services. </li></ul></ul><ul><ul><li>Some some commodities are secondary to primary business. </li></ul></ul>
  13. 14. NAICS classifies industries <ul><li>N orth A merican I ndustrial C lassification S ystem. </li></ul><ul><li>Six-digit code read from left to right (general to more detailed industries). </li></ul><ul><ul><li>First two digits = sector (manufacturing). </li></ul></ul><ul><ul><li>Third digit = sub-sector (food manufacturing). </li></ul></ul><ul><ul><li>Fourth digit = industry group (dairy product manufacturing). </li></ul></ul><ul><ul><li>Fifth digit = NAICS industry (ice cream & frozen dessert manufacturing). </li></ul></ul><ul><ul><li>Sixth digit is country–specific. </li></ul></ul>An example
  14. 15. Primary & secondary commodities <ul><li>Establishments are in industries that define their primary commodities. </li></ul><ul><li>Most establishments produce commodities in addition to primary. </li></ul><ul><ul><li>Newspapers are primary product of newspaper industry; advertising is secondary product. </li></ul></ul><ul><ul><li>Lodging is the primary product of hotels; meal services are secondary products. </li></ul></ul><ul><ul><li>Other examples? </li></ul></ul><ul><li>Secondary commodities are redefined to other industries. </li></ul>
  15. 16. Simple input-output table ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
  16. 17. Industries produce goods & services ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output producers
  17. 18. Industries purchase goods & services ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output purchasers
  18. 19. Production sector of the economy ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
  19. 20. Production sector of the economy ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output interindustry transactions
  20. 21. Production sector of the economy ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output direct requirements
  21. 22. A closer look at interindustry transactions ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand purchases of ind 2 from ind 1
  22. 23. A closer look at interindustry transactions ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand purchases of ind 3 from ind 2; or, ind 2 produces for ind 3
  23. 24. A closer look at interindustry transactions ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand purchases of ind 1 from itself; some industries use the products they make
  24. 25. Industry production function -- the direct supply chain ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand All purchases of ind 1; aka industry production function
  25. 26. Producing & purchasing continues until goods or services created ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand < make/use… make/use… make/use… the production cycle goes round & round >
  26. 27. Consumption ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output
  27. 28. Final demand… Gross domestic product… MDEV 6058  Penn State Management Development ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand ind 1 ind 2 ind 3 ind 4 < personal consumption > < government purchases > < investment > < export >
  28. 29. Total economic output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output production + consumption = total output
  29. 30. Some Examples of Input-Output Tables
  30. 31. Here is the sex part…. < where jobs come from >
  31. 32. Jobs are created because… <ul><li>Total output is created by a mix of productive resources. </li></ul><ul><li>Labor is a productive resource, along with land and capital. </li></ul><ul><li>Human capital is required to produce goods and services. </li></ul><ul><li>People, with other resources, create output. </li></ul>
  32. 33. Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3 ind 4 < in each industry, it takes a certain number of people to create a dollar’s worth of total economic output >
  33. 34. Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3 ind 4 < if It takes .001 workers to create $1 of economic output, then,                               
  34. 35. Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 Ind 2 ind 3 ind 4 < if It takes .001 workers to create $1 of economic output, then, with $1 billion of total industrial output, 1 million workers are required >
  35. 36. Jobs are tied to total output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3 ind 4 < changes in labor intensity or in total economic output create changes in numbers and kinds of jobs >
  36. 37. Occupational employment is tied to total industrial output… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output ind 1 ind 2 ind 3 ind 4 < industries use different occupations > < industries use different labor intensities > < occupational employment differs by industry >
  37. 38. Occupational employment is created.. … when people use their unique human capital to create goods & services
  38. 39. Results of input-output analysis
  39. 40. Input-output tables are used for… <ul><li>Economic accounting </li></ul><ul><li>Forecasting </li></ul><ul><li>“ What if” simulation </li></ul>
  40. 41. Local uses of input-output analysis < producer & purchaser data > < multipliers >
  41. 42. Multiplier A product of input-output analysis
  42. 43. producer/purchaser data… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output producers purchasers
  43. 44. Multipliers <ul><li>Economic impact of change in final demand. </li></ul><ul><li>Calculated for output, income, employment, taxes, and other factors. </li></ul><ul><li>Show total effects of change on economy. </li></ul><ul><li>Expressed as a positive number. </li></ul>
  44. 45. Producing & purchasing multiplies… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand
  45. 46. Multipliers display three components of change <ul><li>Direct. </li></ul><ul><li>Indirect. </li></ul><ul><li>Induced. </li></ul>
  46. 47. Direct effects <ul><li>Changes in production as a result of immediate effects of a change in final demand. </li></ul><ul><li>E.g., increase in demand for autos increases production of autos. </li></ul>
  47. 48. Indirect effects <ul><li>Changes in production in industries supplying industry delivering the final product. </li></ul><ul><li>E.g., increase in auto production increases production in supplying industries (like glass, steel, plastics). </li></ul>
  48. 49. Induced effects <ul><li>Changes in direct and indirect production increase income and, therefore, consumption (and, maybe saving). </li></ul><ul><li>E.g., workers in auto industry and supplying industries spend and save their income, creating additional economic activity. </li></ul>
  49. 50. Two types of multipliers type 1 = type 2 = direct + indirect direct direct + indirect + induced direct
  50. 51. Some employment multipliers
  51. 52. <ul><li>Input-output model, extended to social accounting. </li></ul><ul><li>Type 1 and type 2 multipliers for output, value added, employment, taxes, and others. </li></ul><ul><li>Full access to input-output table. </li></ul><ul><li>Available for nation, state, county, and sub-county. </li></ul>http://www.implan.com
  52. 53. Marketing waste industries <ul><li>Waste hauling and landfills are part of our highways and landscape. </li></ul><ul><li>No one wants waste hauled near their homes. </li></ul><ul><li>Landfills are not desirable neighbors. </li></ul><ul><li>The Pennsylvania Waste Industries Association wanted information about economic impact of waste hauling/landfills in Pennsylvania. </li></ul>IMPLAN analysis of multipliers for waste/recycling activity: Employment Personal Income Total Income Value Added Total Output
  53. 54. Waste/recycling multipliers for Pennsylvania
  54. 55. Loss of opportunity Penn State research on: Community Costs of Technical Skills Deficits
  55. 56. Quick response, regional impact Penn State research: Economic & Workforce Brief series
  56. 57. Economic Impact Analysis with IMPLAN Rose M. Baker David L. Passmore

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