Congressional District Analysis

Hello John, The value of Industry Sales should be total Output, and it sounds like instead of working with Output you are working with budgetary expenditures and Labor Income. 1. If you are entering budget line items, this should be done as an Industry Spending Pattern rather than an Industry Change Activity. The expenditures represent the first round of indirect effects, not direct effects and the Local Purchase Percentage should be left at the imported values. 2. The Labor Income needs to be run as a Labor Income Change, not an Industry Change. If you don't have this Activity type available to you, you can activate via File>User Preferences. Once you have opened the User Preferences window, you will want to choose the Analysis tab. On the Analysis tab you will select Advanced Modeling, if it is not already checked and then check the Enable Accounts Explorer check box. This will activate the Explore menu in both your Standard and Tasks bars and make other Activity types available in the New Activity window. This technique is known as Analysis-by-Parts, for which we have a[url=https://www.google.com/url?q=http://implan.com/v4/index.php%3Foption%3Dcom_multicategories%26view%3Darticle%26id%3D730:case-study-analysis-by-parts%26Itemid%3D71&sa=U&ei=_KagU92dDJOOqAa0-4GoAQ&ved=0CAUQFjAA&client=internal-uds-cse&usg=AFQjCNF-5OTXt_7grGXzf-R4zUGq2TGocw] tutorial here.[/url] The reason that you are seeing the larger Output is a result of the nature of an Industry Change Activity. Because the Activity type is designed to have Industry Sales = Output, the value entered into Industry Sales then generates an regionally appropriate estimate of Employee Compensation and Proprietor Income based on the sales value. Conversely, when you enter in a value of Employee Compensation and/or Proprietor Income this Activity Type makes an estimate of the appropriate level of Industry Sales associated to that income. In affect the technique you used double-counted or double-entered the value of your production, because your first group of Activities also generated Labor Income driving the Induced Effect and your last Activity also generate a presumed Output value causing an increase in Direct and Indirect demand. Hopefully this helps. Please let us know if you have any further concerns.

Thank you very much for the response-it was very helpful. As far as the analysis by parts example, I do have a few questions. 1.) At each district level, I have local vendor expenditures as well as employee compensation info for workers who reside in the area, but no detailed production function info is available. What would be the best way to proceed, if possible? 2.) When setting coefficients, I'm unable to determine coefficients for other items, such as value added. Should I determine coefficients for each vendor expenditure as a percentage of the total, or do I need to relate them to employee compensation? 3.) How was the factor of 5 derived from the task c analysis? Thanks again for all of your help--it is greatly appreciated!

Hello John, Great questions, 1. We apologize to have to ask a clarifying question about your question, but we want to be sure that this is the case. When you say you have local vendor expenditures, do you mean you that for a larger project, say medical component building, you know what the medical component company purchases from their vendors at a ZIP Code or county level, so that you can pinpoint purchases made by the medical components company to specific regions? Or are you describing something else? If you have the value spent by the medical component manufacturer on goods and services that are local, but you don't know what those purchase are, you are probably best using the total goods and services value as the Activity Level and letting IMPLAN estimate the regional purchasing ability, which the imported spending pattern will do using the Local Purchase Percentage field. It is important to remember that the Indirect rounds include not just the first rounds of purchases but the resulting rounds as well. Alternatively, if you know the goods and services that are purchased locally, you can adjust their Local Purchase Percentage values to 100%. But you would only want to do this if you knew that all of the purchase of that good and service was local, and only make the adjustment to known local purchases. If you are confident nothing else is local, you could set the Local Purchase Percentage to '0' for the remaining purchases in the spending pattern. However, if this is the case, (you know the locally purchased items and the locally purchased values, and that nothing else is local) you could model just the values you know, since the remainder will lead from the system. 2.We apologize if we aren't answering what you are asking here, please let us know if we do not address your question. In the Explore> Social Accounts> Balance Sheet (Tab), and select View By: Industry Balance Sheet and the Value Added tab you should see the coefficients of the four Value Added factors. These will sum to less than 1.00 since they make up only the one portion of the total production based on (Output = Intermediate Expenditures + Value Added)you can see the remainder of the value under the Commodity Production tab. The ratio of Intermediate Expenditures (goods and services budget) to Value Added that is displayed in the Sector that most closely matches your operational facility (such as the medical device manufacturer we used above)for your region is displayed when you select that Sector from the drop-down menu at the top of the window. Unless you have data for your firm on all the elements, you can make the assumption that these ratios will be consistent with your firm. If you are working with a single firm it will either be a corporation or owned by a sole proprietor or a partnership. If the former you can put your value solely into Employment Compensation, if the latter you can use the Proprietor Income field. If you are working with several businesses and aren't sure if both are included, you can use the split provided in the underlying Study Area Data as a means of splitting the compensation. You can normalize the Labor Income portion by summing the two dollar values (Employment Compensation + Proprietor Income) and then dividing the total by each individual value (Employment Compensation/Total Labor Income and Proprietor Income/Total Labor Income). 3. The spending pattern is based on 100MW of production and the total production is 500MW, so the factor of five is derived to bring the spending pattern up to the value of total production. Hopefully this helps. Please let us know if you have any additional questions.

Thank you so much--you're answers have been very, very helpful. I do have a few more quick questions: 1.) When examining spending in regions outside where my firm is located, would it be best to use the same production function associated with the industry? Do I need to make any adjustments for taxes on production, or should I just assume they are the same? 2.) I'm including 3rd party activity associated with the company into the model to examine its impact as well. I have revenue information from this companies. Would it be best to enter their sales as an industry change? How should I account for the impact of their employees, and how will this affect my direct, indirect, and induced sales? 3.) How would direct taxes be calculated from these results? 4.) Also, I have additional spending from the firm that falls outside my IMPLAN area (and therefore can't be analyzed), and I'd like to include a small percentage of it to gauge impact since inputs are substituted for revenues. Would it be best to include these as sales? how should I best proceed with that, since I've already for all of the firms employees and compensation in other aspects of the model? Thanks again for all of your help--it is immensely appreciated. John

Hi John, Regarding 1: If you have data indicating the taxes paid per $ of production, or payroll costs or any specific data about the firm being studied, you may certainly customize the model's data (Customize > Study Area for employment/value added changes) Regarding 2: In general, revenue corresponds to output, and can be entered as "Industry Sales" in an Industry Change event. The impact of employees will be accounted-for in this analysis, using regionally- and industry-specific labor income to output ratios. If you have different information about the relative levels of sales to labor income, you can pursue the analysis-by-parts method described in previous posts. One warning, though: if the 3rd party activity is part of the supply chain of the company (or vice-versa), using the total revenue for both as your impact would result in double-counting. Note that the direct effects (employment, output, etc.) will reflect all industry sales events specified and applied to multipliers by the model. Thanks!