The document discusses using input-output analysis and IMPLAN software to conduct economic impact analyses. It provides an overview of input-output tables and how they can be used to estimate multipliers showing the total economic impact of changes in final demand or industry output. Multipliers capture the direct, indirect, and induced effects of these changes on jobs, income, value added, and total economic activity. The document gives examples of how input-output models and multipliers can help analyze impacts of industries like waste hauling and landfills.

1. Economic Impact Analysis with IMPLAN Rose M. Baker David L. Passmore

2. Who we are… Rose M. Baker David L. Passmore Who are you?

3. Your experiences & plans http://implan.questionpro.com

4. Your experiences & plans What you told us….

6. Our process today We have a lot of information. But, we don’t need to dump it all on you. No time pressure to do it all. Bring your knowledge and experiences to the table. Ask questions! Talk! Challenge! A copy of all slides is provided on a web site. We will not overwhelm you with handouts. Sources of information are available on a web site. Breaks and lunch will occur!

7. For information after today

8. Input-Output Analysis A systematic view of production and consumption in an economy

9. Sex life of your regional economy < the birds & bees of job creation >

10. The economy is like a ball of string < complex > < intertwined > < large > < unexpected >

11. Way to organize data < input-output tables > Summarize production & consumption.

12. Input-output table ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output

13. How is economic activity classified? An industry is a group of establishments with similar production processes or products. An establishment is a single physical location where business is conducted. Industrial operations conducted or services provided. Not to be confused with an enterprise. A commodity is a group of similar products. Industries make and use commodities. Some commodities are primary products or services. Some some commodities are secondary to primary business.

14. NAICS classifies industries N orth A merican I ndustrial C lassification S ystem. Six-digit code read from left to right (general to more detailed industries). First two digits = sector (manufacturing). Third digit = sub-sector (food manufacturing). Fourth digit = industry group (dairy product manufacturing). Fifth digit = NAICS industry (ice cream & frozen dessert manufacturing). Sixth digit is country–specific. An example

15. Primary & secondary commodities Establishments are in industries that define their primary commodities. Most establishments produce commodities in addition to primary. Newspapers are primary product of newspaper industry; advertising is secondary product. Lodging is the primary product of hotels; meal services are secondary products. Other examples? Secondary commodities are redefined to other industries.

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

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

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

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

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

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

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

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

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

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

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 >

27. Consumption ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total output

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 >

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

30. Some Examples of Input-Output Tables

31. Here is the sex part…. < where jobs come from >

32. Jobs are created because… Total output is created by a mix of productive resources. Labor is a productive resource, along with land and capital. Human capital is required to produce goods and services. People, with other resources, create output.

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 >

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,

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 >

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 >

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 >

38. Occupational employment is created.. … when people use their unique human capital to create goods & services

39. Results of input-output analysis

40. Input-output tables are used for… Economic accounting Forecasting “ What if” simulation

41. Local uses of input-output analysis < producer & purchaser data > < multipliers >

42. Multiplier A product of input-output analysis

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

44. Multipliers Economic impact of change in final demand. Calculated for output, income, employment, taxes, and other factors. Show total effects of change on economy. Expressed as a positive number.

45. Producing & purchasing multiplies… ind 1 ind 2 ind 3 ind 4 ind 1 ind 2 ind 3 ind 4 final demand total demand

46. Multipliers display three components of change Direct. Indirect. Induced.

47. Direct effects Changes in production as a result of immediate effects of a change in final demand. E.g., increase in demand for autos increases production of autos.

48. Indirect effects Changes in production in industries supplying industry delivering the final product. E.g., increase in auto production increases production in supplying industries (like glass, steel, plastics).

49. Induced effects Changes in direct and indirect production increase income and, therefore, consumption (and, maybe saving). E.g., workers in auto industry and supplying industries spend and save their income, creating additional economic activity.

50. Two types of multipliers type 1 = type 2 = direct + indirect direct direct + indirect + induced direct

51. Some employment multipliers

52. Input-output model, extended to social accounting. Type 1 and type 2 multipliers for output, value added, employment, taxes, and others. Full access to input-output table. Available for nation, state, county, and sub-county. http://www.implan.com

53. Marketing waste industries Waste hauling and landfills are part of our highways and landscape. No one wants waste hauled near their homes. Landfills are not desirable neighbors. The Pennsylvania Waste Industries Association wanted information about economic impact of waste hauling/landfills in Pennsylvania. IMPLAN analysis of multipliers for waste/recycling activity: Employment Personal Income Total Income Value Added Total Output

54. Waste/recycling multipliers for Pennsylvania

55. Loss of opportunity Penn State research on: Community Costs of Technical Skills Deficits

56. Quick response, regional impact Penn State research: Economic & Workforce Brief series

57. Economic Impact Analysis with IMPLAN Rose M. Baker David L. Passmore