This article is designed to help you explain to key stakeholders what IMPLAN is, how it works from a high level, and the history and reputation of the IMPLAN data and software as a leader in the field of economic impact analysis. Feel free to copy and paste these statements into your reports or presentations!
WHAT IS IMPLAN
IMPLAN is the leading provider of economic impact data and analytical applications. IMPLAN serves the economic data needs of researchers, policy makers, decision makers, advocates, business leaders, governments, and more.
IMPLAN was created by academics to serve the needs of the United States Forest Service in the 1970’s. It has been transformed today to serve as a solution-provider for anyone interested in better understanding their economy. IMPLAN is a regional economic analysis software and data application that is designed to estimate the impact or ripple effect of a given economic activity or the contribution of some existing activity within a specific geographic area.
IMPLAN utilizes an economic modeling technique called Input-Output analysis and a Social Accounting Matrix, which is a type of applied economic analysis that tracks the interdependence among various producing and consuming industries of an economy and the spending of households. It measures the relationship between a given set of demands for final goods and services and the inputs required to satisfy those demands.
IMPLAN has been a standard tool for academic and professional economists for decades. The methods used to produce IMPLAN’s economic data set and economic impact estimates have been widely published both in professional publications as well as peer-reviewed academic journals. Many of these methods are considered standard best practices in a wide variety of applied economic fields today.
This section is designed to help you explain to you and your key stakeholders what assumptions are inherent in IMPLAN. These assumptions are key to understanding results and reporting them accurately and fairly.
Studies, results, and reports that rely on IMPLAN data are limited by the researcher’s assumptions concerning the subject or event being modeled. IMPLAN provides the estimated Indirect and Induced Effects that stem from the given economic activity as defined by the inputs. Some Direct Effects may be estimated by IMPLAN when such information is not specified by the user. While IMPLAN is an excellent tool for its designed purposes, it is the responsibility of the user to be sure inputs are defined appropriately and to be aware of the following assumptions within Input-Output and Social Accounting Matrix models.
CONSTANT RETURNS TO SCALE
The same quantity of inputs is needed per unit of Output, regardless of the level of production (Adams & Stewart, 1956; Christ, 1955; MIller & Blair, 2009). In other words, if Output increases by 10%, input requirements will also increase by 10%.
FIXED INPUT STRUCTURE / NO SUBSTITUTION EFFECTS
There is no input substitution in the production of any one Commodity (Adams & Stewart, 1956; Bess & Ambargis, 2011; Christ, 1955; MIller & Blair, 2009). This means that the same recipe of inputs will always be used to create the Output unless changes to the IMPLAN production function are made.
All firms within an Industry are characterized by a common production process. If the production structure of the initially-affected local firm is not consistent with the average relationships of the firms that make up the industry in the I-O accounts, then the impact of the change on the local economy will differ from that implied by a regional multiplier (Bess & Ambargis, 2011). In IMPLAN, edits can be made to the production function of an industry in order to model the operations of a distinct firm.
NO SUPPLY CONSTRAINTS
There are no restrictions to inputs, raw materials, and employment (Christ, 1955). The assumption is that there are sufficient inputs to produce an unlimited amount of product. It is up to the user to decide whether this is a reasonable assumption for their study area and analysis, especially when dealing with large-scale impacts.
An Industry, and the production of Commodities, uses the same technology to produce each of its products (Guo, Lawson, & Planting, 2002). In other words, an Industry's Leontief Production Function is a weighted average of the inputs required to produce the primary product and each of the byproducts, weighted by the Output of each of the products. The technology assumption is used to convert make-use tables (or supply-use tables for international datasets) into a symmetric I-O table. IMPLAN is an Industry Technology Assumption (ITA) model for all Industries which do not have any redefinitions into or out of them. For the Industries which do contain redefinitions, the production functions contain purchases of some Commodities necessary to make the secondary Commodity that has been redefined into it; thereby falling under the Commodity Technology Assumption (CTA).
CONSTANT BYPRODUCT COEFFICIENTS
As a requirement of the technology assumption, Industry byproduct coefficients are constant. An Industry will always produce the same mix of Commodities regardless of the level of production. In other words, an Industry will not increase the Output of one product without proportionately increasing the Output of all its other products.
THE MODEL IS STATIC
No price changes are built in IMPLAN and the underlying data and relationships are not affected by impact runs (Bess & Ambargis, 2011). Input-Output models do not account for general equilibrium effects such as offsetting gains or losses in other Industries or geographies nor the diversion of funds from other projects. I-O and SAM models assume that consumer preferences, government policy, technology, and prices all remain constant. In IMPLAN, the relationships for a given year do not change unless intentionally modified.
Type I multipliers measure only the backward linkages, also known as upstream effects (Bess & Ambargis, 2011). Input-Output analysis does not look at forward linkages in terms of how an Industry’s production is used as an input for other production or for final use, also known as downstream effects.
The length of time that it takes for the economy to settle at its new equilibrium after an initial change in economic activity is unclear because time is not explicitly included. One can assume the adjustment will be completed in one year because the flows in the underlying Industry data are measured over the same length of time. However, the actual adjustment period varies and is dependent on the change in final demand and the related industry structure that is unique to each study (Bess & Ambargis, 2011). In IMPLAN, the Dollar Year must be specified on the impacts screen. Results can be viewed in any dollar year regardless of the Dollar Year of the Impacts.
STATEMENTS OF COLLABORATION
While key assumptions were made and approved by ___________, IMPLAN provided economic language and other supporting services.
Some of the language used in this report was provided by IMPLAN as part of the IMPLAN Report Toolkit.
This template was created by IMPLAN to present the results of the analysis prepared by __________.
This report used the most current [year] data for [Region]. It was prepared by ____________ and reviewed by Economists at IMPLAN. [Only for Project Reviews].
The following is a list of important terminology used in IMPLAN. A complete glossary offers additional definitions.
|Input-Output||A type of applied economic analysis that tracks the interdependence among various producing and consuming industries in an economy; it measures the relationship between a given set of demands for final goods and services, and the inputs required to satisfy those demands|
|Industries||The different IMPLAN Industry codes based on definitions put forth by the Bureau of Economic Analysis; there is a crosswalk available between NAICS codes and IMPLAN Industries|
|Direct||Initial effects to a local industry or industries due to the activity or policy being analyzed|
|Indirect||Effects stemming from business to business purchases in the supply chain taking place in the region|
|Induced||Effects in the region stemming from household spending of income, after removal of taxes, savings, and commuters|
|Output||The value of industry production;
|Employment||An industry-specific mix of full-time, part-time, and seasonal employment. An annual average that accounts for seasonality and follows the same definition used by the BLS and BEA. IMPLAN Employment is not equal to full-time equivalents.|
|Labor Income||All forms of employment income, including Employee Compensation (wages and benefits) and Proprietor Income|
|Employee Compensation||Total payroll cost of the employee including wages and salaries, all benefits (e.g., health, retirement) and payroll taxes|
|Proprietor Income||The current-production income of sole proprietorships, partnerships, and tax-exempt cooperatives. Excludes dividends, monetary interest received by nonfinancial business, and rental income received by persons not primarily engaged in the real estate business (BEA).|
|Value Added||The difference between an industry's or establishment's total output and the cost of its intermediate inputs; it is a measure of the contribution to GDP|
|Intermediate Inputs||Purchases of non-durable goods and services such as energy, materials, and purchased services that are used to produce other goods and services rather than for final consumption|
|Taxes on Production & Imports Net of Subsidies (TOPI)||Includes sales and excise taxes, customs duties, property taxes, motor vehicle licenses, severance taxes, other taxes, and special assessments|
|Other Property Income (OPI)||Gross Operating Surplus minus Proprietor Income; it includes consumption of fixed capital (CFC), corporate profits, and business current transfer payments (net)|
|Multipliers||Multipliers are a measure of an Industry's connection to the wider local economy by way of input purchases, payments of wages and taxes, and other transactions. It is a measure of total Effects per Direct Effect within a Region.|
|Industry Contribution Analysis (ICA)||Industry Contribution Analysis is a method used to estimate the value of an Industry or group of Industries in a Region, at their current levels of production.|
|Multi-Regional Input-Output Analysis (MRIO)||MRIO analyses utilize interregional commodity trade and commuting flows to quantify the demand changes across Regions stemming from a change in production and/or income in another Region. It measures the economic interdependence of regions.|
|Leakages||Economic activity associated with the modeled Event(s) that does not generate additional effects in the defined Region|
All output from the IMPLAN System, including, without limitation, IMPLAN Models, is subject to copyright held by IMPLAN. Subject to the prohibition on Client publication of Multipliers at Section 3 “Permitted Use and License Limitations'' of the IMPLAN System Terms and Conditions of Use, Client may use, display, reproduce and publish such results in analyses, reports, presentations, and publications; provided that Client includes a notation, as prescribed below.
Provided further, that such publications may contain summary information, each data point in any such publication may be included for no more than ten (10) industries, and general summary data (e.g., Value Added or Output) in each such publication may be included for no more than ten (10) geographies.
WRITTEN IN TEXT
When referencing the application or data, spell “IMPLAN” in all caps. Similarly, when referencing the company, use “IMPLAN Group LLC.”
“Our study used the 2021 Mecklenburg County, NC IMPLAN model to examine regional purchase coefficients for the study area.”
“We used the IMPLAN calculation process to estimate the economic impact of [event(s) input into the IMPLAN application]. The following estimations and assumptions were made outside of IMPLAN to evaluate the initial or direct effect of [event(s) being inputted in IMPLAN]:”
“We love IMPLAN Group LLC so very, very much.”
These include footnotes and captions for tables and charts. When citing IMPLAN as a data source, it is mandatory that you include the data year and region of your study.
Footnote: “1 For more information on the IMPLAN modeling process, visit IMPLAN.com.”
Caption: “Source: IMPLAN 2021 Data for model region including Oregon’s Yamhill, Marion, Polk, Clackamas, and Multnomah counties.”
Parenthetical Citation: “The RPC for Oilseeds for Washington County is .75 (IMPLAN 2021 Data).”
Citing IMPLAN shows the credibility of your study and allows for replicability. For more information, check out the full citation guidelines.
Citing the IMPLAN Blog:
[Author’s Last name], [First name]. “Title of the Article or Individual Page.” IMPLAN Blog, IMPLAN Group, LLC, [Day] [Month] [Year], IMPLAN.com/[Link to the article].
Citing the IMPLAN Support Site:
[Author’s Last name], [First name]. “Title of the Article or Individual Page.” IMPLAN Support Site, IMPLAN Group, LLC, [Day] [Month] [Year], Support.IMPLAN.com/[Link to the article].
Citing an IMPLAN Paper:
[Author’s Last name], [First name]. “Title of the Paper or Individual Page.” IMPLAN Website, IMPLAN Group, LLC, [Day] [Month] [Year], IMPLAN.com/[Link to the paper].
Citing use of the IMPLAN Application or Data:
IMPLAN® model, [YEAR] Data, using inputs provided by the user and IMPLAN Group LLC, IMPLAN System (data and software), 16905 Northcross Dr., Suite 120, Huntersville, NC 28078 www.IMPLAN.com
Adams, A.A. & Stewart, I.G. (1956). Input-Output Analysis: An Application. The Economic Journal, 66 (263), 442-454.
Bess R. & Ambargis, Z.O. (2011). Input-Output Models for Impact Analysis: Suggestions for Practitioners Using RIMS II Multipliers. Presented at the 50th Southern Regional Science Association Conference, New Orleans, Louisiana. https://www.bea.gov/system/files/papers/WP2012-3.pdf
Guo, J., Lawson, A.M., & Planting, M.A. (2002). From Make-Use to Symmetric I-O Tables: An Assessment of Alternative Technology Assumptions. Presented at the 14th International Conference on Input-Output Techniques, Montreal, Canada. https://www.bea.gov/system/files/papers/WP2012-3.pdf
Horowitz, K.J. & Planting, M.A. (2009). Concepts and Methods of the U.S. Input-Output Accounts. Bureau of Economic Analysis, US Department of Commerce. https://www.bea.gov/sites/default/files/methodologies/IOmanual_092906.pdf
Miller, R.E. and P.D. Blair. (2009). Input-Output Analysis: Foundations and Extensions, Second Edition. New York: Cambridge University Press.
Written August 30, 2023