Avoided Unemployment Benefits


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    IMPLAN Support
    The level and duration of unemployment benefits that potentially would be paid to workers who would lose employment in the event of a plant’s closing depend on the unemployment insurance laws in your area as well as characteristics, e.g. wages, of the employees in question. IMPLAN does not isolate unemployment benefits as a type of government expenditure (it is aggregated with other governmental transfer payments to households), so you would need to estimate that based on your knowledge of your state’s laws and the characteristics of the employees. For the general tax impact of the plant's operations, including income taxes paid by households, you can model the plant's operations as an Industry Change Activity. The tax impact results of the negative industry change activity will be the negative values of a positive industry change activity. You will want to be clear about the implied behavioral assumptions of this type of calculation, e.g. that employees' spending of their compensation will disappear entirely rather than be (partially) offset by spending from savings. A couple more considerations: You will want to be clear about which level(s) of government are considered in your fiscal analysis. You may also want to consider feedback effects of unemployment benefits, such as the fact that some of the benefits paid would have been spent in the region, generating positive tax impacts which would reduce the magnitude of the avoided net fiscal cost and could be modeled via a positive Household Income Change. You would also want to consider whether the government will spend the money on other things now that it does not have to pay the funds out as unemployment benefits. To model this alternative government spending (as opposed to assuming the would-be spending on unemployment benefits will be saved until needed for unemployment payouts later on down the road), you can do either of the following: 1. If you know exactly what the government will spent the money on now that they do not have to spend it on unemployment payouts, you can use one of the more detailed government spending patterns found by going to Activity Options > Import > From Another Model, browsing to the Implan > Utilties folder and selecting the "MIG2007ActLib440_SpendingPatternsNoPayroll_for_Programs_by_SLGovt" file, from which you can choose whichever spending pattern is most appropriate. Note that these spending patterns do not include payroll so you would need to set Activity Level to just the non-payroll portion of the funds and then run a separate Labor Income Change Activity for the payroll portion. 2. If you do not know what exactly they will spend the funds on, you can use one of the more general government spending patterns (i.e., S/L Govt Non-Education) found via Activity Options > Import > Institution Spending Pattern. In this case, there is a line item for payroll so you would want to set the Activity Level to t Please let us know if you have any further questions.
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