Households in SAM Total Requirements Matrix
Hello, I'm interested in how economic impacts may be distributed across household income groups within an industry. I built a 2012 North Carolina model and aggregated it according to IMPLAN's 440 sector 2-digit aggregation. My SAM was set to the default of households only. I then downloaded the SAM Industry x Industry direct requirements matrix and from there built my total requirements matrix. Both my Industry Type I and SAM multipliers matched those found in IMPLAN's multiplier reports for all industries. My question concerns the other column elements for each industry, the labor income and household components. What is their proper interpretation? I believe these elements are simply telling me that an industry will purchase $X of labor income and $X dollars of commodities from each household group in response to a change in final demand. I'm unsure whether, or how, they may be providing additional insight into total household earnings and how the additional labor income is distributed across household groups in response to a final demand change for each industry. Do the household column elements for each industry provide insight into how the additional labor income would be distributed to, or across, households as well? Thanks for any and all assistance you can provide.
Using the model described previously (2 sector aggregation of the 2012 440-sector North Carolina model), I exported the IxI direct requirements matrix to Excel to build my own total requirements matrix. The model I built in IMPLAN was closed with respect to households. All of the industry Type SAM multipliers I calculated in Excel match those found in IMPLAN's multiplier report. Also, the multipliers I calculated for employee compensation, proprietor income, match the total effects multipliers for each sector. I can then divide them by the corresponding direct requirement and get their respective Type SAM multipliers. Below those I have the following detailed multipliers for households (the example I'm providing is from Agriculture, Forestry, Fishing, and Hunting) Industry Type SAM Multiplier: 1.7199 Households LT10k 0.0011 Households 10-15k 0.0015 Households 15-25k 0.0091 Households 25-35k 0.0169 Households 35-50k 0.0370 Households 50-75k 0.0737 Households 75-100k 0.0636 Households 100-150k 0.0803 Households 150k+ 0.1509 I am interested in the multiplier effect of an industry change across household income groups, to see who might benefit from economic development/expansion of an industry in a region. My question is, are these detailed total effects multipliers explaining the distribution of potential economic impacts across households? How might I go about converting them to Type SAM multipliers?
Thank you for the logistical explanation of what you are trying to accomplish. We hope this information helps, but if it's not getting at what you are trying to derive, it might be helpful for us to understand what you are actually trying to accomplish with the end results of what you are calculating. The distribution of Household Income is based on the number of Households in each group and how much they spend on each commodity per $1 of income. However, this does not vary by Industry impacted; however, different industries have different levels of Labor Income per dollar of Output, so the total dollar amount going to each Household Income Group per $1 of Industry Output will differ by Industry. To calculate the SAM Multiplier the equation (Total Household impact)/(Direct Household impact) is used. You can get the Direct impact on Households by taking the Direct Employment Compensation change and then examining the SAM to see what proportion of each dollar of Employment Compensation goes to each Household type (it won’t add to 1.00 since some Employment Compensation goes to government and commuters). To get the total impact, you would do the same exercise but with the total Employment Compensation change rather than the direct Employment Compensation change. The interpretation of this value is somewhat less clear–but it can be thought of as the total dollars received by each household type per dollar received by that household type. The Direct impact on Households will vary by Industry due to different Employment Compensation/Output ratios by Industry, and the Indirect and Induced Effects will vary by direct Industry since different industries buy different amounts of inputs and those input suppliers will have different pay rates, etc. Again, however, the only thing that will differ is the total amount of dollars received by Households in general; there will be no variance among which Household group benefits more than others based on which Industry is impacted. We aren't entirely clear on your derivation of the household multipliers above, so we are not sure of their interpretation. Are you saying that for every dollar of Ag, Forestry, Fishing, and Hunting Output, Households LT10k receive $0.0011? One additional thought that may be useful to you, depending on exactly what it is you are trying to determine is to consider a having us do a consultation using our recently developed but not released KSA data. While each Household group will still get the same proportion of impact regardless of Industry impacted, this additional overlay would be able to see what different types of workers would most be affected (in terms of their KSAs and wage rates), which would indeed vary by industry impacted! Please let us know if this interests you. Best regards, IMPLAN Group Staff
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