Impact of increased labor income

I'm trying to figure out how the total economic (output) impact from an increase in labor income can be less than the income increase. In theory, of course, the income recipients could spend very little of their additional income locally, but I specified 80% local spending. The attached file (with comments added) is for $1,000 additional labor income for New York City, year = 2013, LPC = .8. Anyone who wants to replicate this needs to know that NYC is five counties in NY: Bronx, Kings, New York, Queens, & Richmond. Thanks
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  • Hi, Thank you for your post! By setting LPC = 0.8, you are specifying that 80% of the Labor Income value is earned by locals. You will want to keep LPC = 1.00 unless 20% of the employees do not live locally (please see [url=http://implan.com/index.php?option=com_kunena&view=topic&catid=80&id=11509&Itemid=1679#11515]this [/url]forum post for more on dealing with commuters: ). What households spend their money on and how much is spent locally vs. non-locally is built into the household spending patterns and cannot be adjusted in a Labor Income Change Activity. If you want to adjust these, you would have to use a Household Spending Pattern but there are several important things to note about this approach: 1. If your value is truly Labor Income (i.e., fully-loaded wages) then you would need to first remove all net in-commuters, payroll taxes, personal taxes, and savings before specifying the remainder as the amount that Households ultimately spend. 2. When using Household Spending Patterns you have to specify the household income group to impact - so if you wanted to spread the value amongst the 9 household income categories, you would have to make that split yourself based on the # of HHs in each income group in your region or some other method. The Labor Income Change Activity does this for you automatically. 3. Please keep in mind that while your households may do 80% of their shopping at local retailers, the manufacturing of the goods sold at the retailers is not likely to be local. Thus, if you do adjust LPCs, we would recommend adjusting the LPCs for the retail sectors only and perhaps some service sectors like restaurants, personal care services, and the like. Please see [url=http://implan.com/index.php?option=com_kunena&view=topic&catid=84&id=13274&limitstart=6&Itemid=1679#13517]this [/url]forum post for more on the different household spending activity types. [url=http://implan.com/index.php?option=com_kunena&view=topic&catid=84&id=13226&Itemid=1679#13228 ]This [/url]forum discussion on interpreting results may also be useful.
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