Bill of Goods Approach

Hello IMPLAN Women, Typically Output should be your largest number. Based on what you are indicating below, are you saying that the hospital actually pays more to Labor Income than its total annual sales/Output? Here are a couple of things we can think of that may be going on: Where are you getting the remainder of the value that you are summing Labor Income to when calculating Value Added? You are correct that Labor Income should be a portion of that value based on this the following equations: Value Added = Labor Income + Other Property Type Income + Indirect Business Tax Output = Value Added + Intermediate Expenditures Typically when calculating Analysis-by-Parts types of analysis, the known variables are Direct Output, Employment and Labor Income and the budget value (Intermediate Expenditures value). In these cases we recommend solving for Value Added by subtracting the Intermediate Expenditures from the Output value. The resulting Value Added should be larger and should already include the value of Labor Income. Alternatively, if you have the Indirect Business Tax and the Other Property Type Income values already for the hospital and when you add Labor Income to these, you get a larger Value Added number, this may also be because, in reading your question, that you are nothing looking at total output but rather just the Intermediate Expenditures portion of output. You'll want to make sure that your Direct Output value represents the total annual value of hospital services, not just their expenditures on operational commodities and services.

Thank you! From your email I understand for the change in final demand that we add to output impact should not only include expenditures on operational commodities and services. So does this mean that we should also add payroll? Benefits? Debts/depreciation? Interest? To labor income, is the change in final demand only payroll or payroll and all benefits?

Hi IMPLAN Women, Your Direct Output value should include all taxes collected (Indirect Business Tax)+ loaded payroll values (Labor Income)+ profits, depreciation, interest (Other Property Type Income)+ goods and services purchases (Intermediate Expenditures). Labor Income in IMPLAN is loaded payroll so it includes all payroll and income taxes, benefits and savings. If you have just wage and salary values and need to convert these to loaded payroll values we have a worksheet that can assist you with this: http://implan.com/v4/index.php?option=com_docman&task=doc_download&gid=206&Itemid=7 These glossary entries might also be useful to you: Output: http://implan.com/v4/index.php?option=com_glossary&id=176&Itemid=57 Other Property Type Income : http://implan.com/v4/index.php?option=com_glossary&id=175&Itemid=57 Indirect Business Taxes: http://implan.com/v4/index.php?option=com_glossary&id=54&Itemid=57 Debts would not be a part of the Output value.