ABP: Using Labor Income Events

BYE BYE BYE...IT AIN'T NO LIE

YOU DON'T NEED TO USE ANALYSIS BY PARTS ANYMORE! 

There is a new Event Type in IMPLAN called Industry Impact Analysis (detailed) released on October 6, 2021. You can now enter Employment (Wage & Salary and/or Proprietor), Labor Income (Employee Compensation and/or Proprietor Income), Intermediate Inputs, Taxes on Production & Imports, Other Property Income, and Output from the Impacts screen.

It might sound crazy; but in 99% of cases, you don't need to use ABP anymore. Check out Industry Impact Analysis (Detailed).

Special thanks to *NSYNC for putting the song in our heads again. We all knew life would be much better once you're gone, ABP.

Introduction:

Analysis-by-Parts is a technique by which you can analyzed the impact of an Industry's production/spending in separate components using multiple Events instead of using a single Industry Event. The purpose of this article is to explain how to analyze the Labor Income portion of an Analysis-by-Parts (ABP) using Labor Income Events. 

Detailed Information:

Labor Income

You will need to setup a Labor Income Event either for Employee Compensation (EC), Proprietor Income (PI), or both to capture the effects associated to the Direct labor payments on the economy.

Specification then defines the type of Labor Income that should be entered as the Value.

• If you have only a total Labor Income value, you can:
  1. Enter all of the value as Employee Compensation in one Labor Income Event.
  2. Or, find the % of Output going to Employee Compensation and Proprietor Income based on regional information found in Region Details > Social Accounts > Balance Sheets > Industry Balance Sheet > Value Added.
• If you have a split of Employee Compensation and Proprietor Income create the Event(s) accordingly.
• Remember, these should be fully loaded payroll values which include wage and salary, all benefits (e.g., health, retirement) and payroll taxes (both sides of social security, unemployment taxes, etc.).  You can use the following resource to convert your wage and salary income to an Employee Compensation value as well as to convert an Employee Compensation value in the IMPLAN data or Results to a wage and salary income value. 
  
  
• The Labor Income Event(s) and the Event(s) analyzing the Industry's Intermediate Inputs should be dropped into a Group in which the Dollar Year, Data Year and Region have been defined appropriately. Then, click Run.

What to expect in your results

Since Direct results are not analyzed with this methodology, they are also not reported. Final results require adding the Direct Effects into the table and re-summing the totals.

The Labor Income Event(s) will only generate Induced Effects. The Direct Effect of the Labor Income Event(s) analyzed is simply the total value of the Labor Income analyzed. This value is the total value of Direct Labor Income and should also be included in Direct Value Added and Direct Output as Labor Income is a component of Value Added and Value Added is a components of Output. 

To estimate the Direct Effects, take what information you already know for Employment, Labor Income, and Output and enter that directly. The template is on Recalculating Direct Effects will help you to estimate the remaining pieces based on data from:

> Region Details
     > Study Area Data
          > Industry Averages

Note that these are usually coupled with a Spending Pattern or a Bill of Goods approach to analyze the entirety of spending.

TEMPLATE

Recalculating Direct Effects

RELATED ARTICLES

ABP: Bill of Goods Using Commodity or Industry Events

ABP: Using an Industry Spending Pattern

Updated October 7, 2021