1. How does IMPLAN handle Employment and Output when the Industry performs several functions like a Casino?

By definition, Employment in IMPLAN is a head count and not an FTE equivalent. For a specific definition of Employment in IMPLAN, check out the glossary entry: Employment and Employment FAQ.

While IMPLAN employment and income figures generally start off larger than CEW figures due to the addition of proprietors and proprietor income, a proportion of some sectors’ activity (employment, output, income, etc.) is later reclassified into other sectors. This reclassification process follows the BEA's “redefinitions” practice and is designed to reassign products from producing industries in which they are secondary products to the industries where those products are primary. Consider a popular hotel on the Las Vegas Strip. Such a hotel typically boasts a casino, restaurant, gift shop, and concert stage and would not be very well represented by the production function, income per worker ratio, output per worker ratio, and other factors of the hotel and motel sector. Therefore, IMPLAN utilizes the national redefinition table from the BEA to “redefine” certain small portions of the industry’s activity to other appropriate sectors such as Gambling (495), Restaurants (503), various Retail, and Performing Arts (488). For details on Casinos, visit the article Casinos: Acing the Impact.

2. Does changing the size of Industry affect the Multipliers?

It seems counterintuitive, but an Industry's Multiplier does not depend on the Sector's overall size. Instead, what affects the Multiplier is the underlying relationships used in the creation of the Multiplier (specifically, Labor Income per $1 Output and Intermediate Expenditures per $1 of Output) of that Industry. When you run an impact analysis, it does not matter what the initial size of the Industry is – so long as those Industry relationships are what they should be.

3. Why is my impact smaller at the state level than at the county level?

It's called Aggregation Bias.

It is true that generally a larger region has less leakages due to imports and therefore is typically a larger impact. However, depending on the Industry mix of the county and the region(s) you are comparing it to, the RPCs for what is regionally available in a smaller region can exceed that of a larger region. This typically occurs when the primary region is a key producer of the Commodities being examined in the study (or in general represents the largest functional economy in the region) and thus a larger area increases demand at a faster rate than it provides additional supply, thus reducing the RPC values. However, a key problem also is that while it may seem like you are comparing like regions, because of the nature of Industry aggregation, you are comparing two distinct Multiplier identities. For more on this topic, check out the article MRIO: Size of Your Impact - Questions & Concerns about Small vs. Large Study Regions.

4. Why is my Value Added negative?

Negative values in Value Added are a common source of confusion. But it happens.

VA___EC_PI_TOPI_OPI.jpg

The values for PI, OPI, and TOPI can all be negative and if any one or a set of these sum to a more negative than the positive values. For example, if the negative components are greater in magnitude than the positive components, then you will end up with negative VA.  For more information, read the article The Curious Case of the Negative Tax: Agriculture Subsidies, Profit Losses, and Government Assistance Programs.

5. What is the difference between Impact and Industry Contribution Analysis?

Two general categories of studies using IMPLAN have emerged over the years:  

Impact Analysis is the more common of the two. This type of study examines the economic impacts of an event or change to the economy (e.g., the opening of a new business). These studies address the general question: What are the marginal impacts of the project?

Industry Contribution Analysis is becoming increasingly more common and concerns the role, importance, or contribution of an existing business, project, or industry. These studies address the general question: What is the contribution of the project to the overall economy of the area? 

6. Why are Multipliers from OECD Countries low and how are they calculated?

The difference in Multipliers you will see when running an analysis using OECD data is not in how they are calculated but in the extent of the Indirect and Induced effects within a region for an Industry. The Direct Multipliers are always one. If the Industry in the region imports more of its inputs and if more households make purchases outside the region then the Multipliers will be smaller. In addition, Germany is a smaller country than the U.S. and we would therefore expect it to have smaller RPC's for many Commodities.

 

 

Updated January 13, 2020