economic impact of cost savings
Hi there. I'd like to look at the potential economic impact of a cost savings in an industry. For instance, if a policy change resulted in an $800 million cost savings in the trucking industry, how should I set up the analysis?
My first instinct was to add $800M into employee compensation, assuming that companies would invest that savings in their employees.
I ran a second analysis where I reduced employee compensation by $400, reduced retail sales (fuel use) by $200M, and reduced repair and maintenance by $200M.
Do you have any suggestions?
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IMPLAN SupportHi Kathleen, You could certainly do that - but I would use a Household Income Change Activity. The software will take out savings and personal taxes, which is exactly what you want if you assume the savings will go to employee compensation. Note that this assumes that households will save and spend the "cost savings" as they spend all other income - that is probably the safest assumption in the absence of specific information. We hope this helps. Please let us know if we can be of further assistance.0
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