Industry Impact Analysis (Custom) Events

Deminique Heiks

June 14, 2024 17:32

INTRODUCTION

An Industry is a group of establishments (businesses) engaged in the same or similar types of economic activity. Industry Impact Analysis (Custom) is an Event Type in IMPLAN that, like the Industry Impact Analysis (Detailed) Event Type, allows users to enter more than one known value, while also providing the ability to utilize a Custom Spending Pattern. If the business or Industry operations differ from the Industry’s Regional Leontief Production Function (LPF) and a user would like to utilize a previously created Custom Spending Pattern, then an Industry Impact Analysis (Custom) Event is most appropriate to model the impact.

Event Type	Industry Impact Analysis (Custom)
Event Use	Analyzing a change in an Industry’s production with detailed data and a Custom Spending Pattern
Event Specification	Custom Spending Pattern for an Industry
Event Value	1 or more: Wage & Salary Employment Proprietor Employment Total Employment Employee Compensation Proprietor Income Labor Income Intermediate Inputs Taxes on Production & Imports Other Property Income Output

EVENT TYPE DETAILS

The Industry Impact Analysis (Custom), or IIA (Custom), Event Type is recommended when a user would like to use a previously created Custom Spending Pattern to model the operations of a business or Industry.

The IIA (Custom) Event Type allows users to enter any value across the components of Output. Any value left blank will be estimated by IMPLAN. However, unlike the Standard Industry Events, this Event Type rebalances the Output Equation based on the user’s entered values. The IIA (Custom) Event will utilize entered values from the user to impute any remaining values based on the relationship between them mathematically, taking into account all components of the LPF. However, users can enter zeros in any field to signify they do not exist for that business or Industry. Additionally, users have the ability to edit their pre-built Custom Spending Pattern within the Event.

IMPLAN will always use the Industry’s LPF production function to estimate the Direct Effect for this Event Type, but will prioritize the Event Values in a certain order. IMPLAN will first look at Employment, Labor Income, and Output, then Intermediate Inputs, TOPI, and OPI. The calculation steps for this Event can be found in the Detailed Event Calculations section in the IIA (Detailed) article.

As this Event Type allows users to enter components of both Value Added and Intermediate Inputs, both Industry and Value Added Deflators are utilized in the calculation process. Where Industry Deflators are used to convert the Intermediate Input and Output values to the nominal Dollars in the selected Data Year and the Value Added Deflator is utilized to convert the Value Added components. Read more about IMPLAN Deflators.

INDUSTRY IMPACT ANALYSIS (CUSTOM) EVENT

In this example, we know a restaurant, Oscar’s Bistro, opened a second location in North Carolina in 2025. The new location has 20 Wage & Salary employees, 1 proprietor, a total Labor Income of $500K, a total Output of $1M, and earned no profit in the first year (Other Property Income). The Industry Impact Analysis (Custom) is necessary to model this business’ operations as we were given more than one input value and need to utilize a previously built spending pattern for Oscar’s Bistro.

To set up this activity using an Industry Impact Analysis (Custom) Event, users must first create a unique Title for the Event, then select Industry Impact Analysis (Custom) for the Event Type. Next, users must click on Specification. The drop-down menu allows users to select from a list of Custom Spending Patterns they previously created for Industries and saved.

A Custom Spending Pattern was previously created for Oscar’s Bistro and saved, which was selected for this analysis. The Custom Spending Pattern for Oscar’s Bistro was created using the full-service restaurant Industry Spending Pattern, in which Commodity 3013 and 3014 were deleted, and the pattern was Normalized. To use a Custom Spending Pattern Event, users must first create the Custom Spending Pattern under the Advanced Tools widget. Learn more about creating Custom Spending Patterns.

This Event Type will automatically expand to display all available fields. The value to enter for Wage & Salary Employment is 20, Proprietor Employment is 1, total Labor Income is $500,000, Other Property Income is $0, and Output is $1,000,000.

In this example, values were entered for both Wage & Salary Employment and Proprietor Employment. If either had been set to "0", to indicate they did not exist in this example, a warning would appear informing the user that IMPLAN is automatically setting the corresponding Labor Income to "0".

ANALYZING AN INDUSTRY IMPACT EVENT

Now it is time to assign Events to Groups. To assign an Event, click the Drag Event icon, hold it, and drop it into the corresponding Group. The Multi-Select feature allows users to select more than one Event at a time.

Each Group will indicate the number of assigned Events. To double check if an Event was correctly added to a Group, use the drop-down arrow to view the assigned Events.

Now click Run in the bottom right of the Impacts page.

When the analysis is finished, click View Results. For more information on how to interpret them, check out the article Examining Results & Interpreting Direct, Indirect, and Induced Effects.

In this example, Direct Employment, Labor Income, Other Property Income, and Output were provided as inputs. Our Direct Effect Results show (in 2025 dollars) the 21 total employees, the $500,000 in Labor Income, and the $1M in Output as entered on the Impacts page. IMPLAN utilized the Industry’s production function to distribute the remaining $500,000 (Output - Labor Income) to the other components we left blank (Taxes on Production & Imports and Intermediate Inputs).

NOTE OF CAUTION

The Industry Impact Analysis (IIA) Event Type is a powerful tool used to model impacts from Industry production. As users are able to enter any portion of the production function for an Industry in IMPLAN, there are certain instances when this can cause unexpected results. This typically occurs when an Industry has an abnormal production function where individual components can be greater than 100% or less than 0%. This often occurs for Industries receiving subsidies or with unusual labor requirements. As all production functions must balance to 100% for an Industry, this can sometimes result in negative percentage values for individual components, which may produce negative effects for the modeled Industry.

NEGATIVE EVENT VALUE WARNING

If the sum of the entered event values in the Industry Impact Analysis (Custom) Event result in a negative Output or a user enters a negative Output value, IMPLAN will show an error message to confirm this was intentional. Running an Industry Impact Analysis (Custom) Event with a negative Output value will result in negative Impact Results. The warning will persist even after running the Impacts through an analysis.