Local vs. Outside Hires
I am tasked with determining the economic impact of a short-term filming project within a specified geography. The production provided detailed production expenditures. The associated sectors are relatively straightforward with the exception of locations fees, parking fees, banking fees, insurance, and postage. Are there sectors that account for any of these that I just missed? I was thinking the banking, insurance and postage may need to be excluded if the fees go to a corporation/entity outside of the impact area, but not sure how to handle city/county location and parking fees. Second question is in regard to wages paid and per-diems. Some of the crew, talent, etc., were from the region of study and others came from outside of it. Obviously a local getting their salary presumes that more of that salary will be spent locally whereas an “outsider” is more likely to spend while they were here, but the bulk of benefit would go home with them. I assume separate activities need to be set up for local versus outside, but can you clarify for me how to avoid inflating the impact of the outside hires?
Hello, [ol] [li]The idea with picking a Sector is identifying what business or institution owns the service that is being provided. So, for example, parking fees could be paid to a local government, in which case you’d want to model government spending in the amount of the parking fees, or to a private parking garage or lot, which is covered by IMPLAN sector 512. You can use the Sector Search feature, which maps detailed NAICS codes to IMPLAN codes, to help identify appropriate sectors (It is located in the Event screen next to the Sector field). Banking most likely should go to the banking sector, 433, insurance to 438, and postage to 518. Location fees are a little trickier, as it’s probably less clear who is receiving the location fees. If it’s a private landowner, model it as household spending. If it’s a government, use a government spending pattern. On the topic of accounting for whether the money is spent locally, if you know that the fees are paid to entities outside of the study area, then you should not model them. Impact modeling requires that you model spending that happens in your study area. If you are unsure of how much is spent within your study area, when setting up your event, you can set the local purchase percentage (LPP) to SAM model value. You can set an Event to SAM Model Value by using the Local Purchase drop-down menu in the Event screen. IMPLAN will then assume that the amount spent on those fees mirrors the average rate of spending on the industry(ies) in question that happens within the study area. So, if the model believes that local industries and institutions spend $100 on bank fees, and 20% of that goes to local banks (Regional Purchase Coefficient=0.2), when setting LPP to SAM Model Value, it will use 20% of the value you enter as the direct value.[/li] [li]You could treat the per diem spending similar to a tourism impact. We suggest making a spending pattern for the average goods and services those workers spend in the region. You can either use an Industry Change or Commodity change Activity for this. When you aren't sure if the spending occurs locally, as noted above, you can set the LPP to SAM Model Value. Regarding the regular compensation payments, IMPLAN will not be able to tell you what share of the labor compensation was paid to locals vs. to outsiders. If you already know this, though, modeling the income of locals would be done with a Labor Income Change Activity, in the amount of the total employee compensation paid, which should include benefits. If you have data only on wage and salary income payments, and need to convert that to EC, use data from the [url=http://www.implan.com/index.php?view=document&alias=4-536-fte-a-employment-compensation-conversion-table&category_slug=536&layout=default&option=com_docman&Itemid=1764]spreadsheet here[/url]. Regarding outsiders, if the per diem is sufficiently generous, you might not want to model their wage & salary payments at all (unless you are concerned with the tax impact of compensation paid to outsiders, in which case you’ll want to model that separately and take note only of the tax impacts), as they might spend only per diem money in the study area. Otherwise, you should try to estimate how much money from compensation will be spent in the area, and model only that. Compensation paid to outsiders, albeit paid to them within the study area, could be added to direct effects, but without any indirect or induced effects, since one would assume 100% leakage, assuming the per diem is all that they are actually spending. [/li] [li]A third note: Since you have described this as a short-term impact, you should note that the employment impact estimates in IMPLAN will be on an annual basis. So, if the total employment is 100, that means 100 average annual full- and part-time job-years. That probably won’t correspond to 100 individual humans employed in a short-term project. To illustrate, let’s assume that there’s only one industry in an area, that industry has an employment value of 1 and EC of $30,000. You have an impact event with a total EC effect of $30,000, entirely in that industry, but the effect happens over the course of 6 months. The employment impact will still be 1, since the model data is all on an annual basis. But this could conceivably correspond to two individuals being paid $15,000 each over six months. So, we recommend explaining that or otherwise adjusting your employment effects, and making note that the employment effects are temporary.[/li] [/ol] Please let us know if you have any further questions. Best regards, IMPLAN Group Staff
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