Interpreting the Results of Payroll Analysis

Hi Andrew, In an I-O model, the change in final demand leads to a change in output. The change in output results in direct, indirect and induced effects. The direct effect is the initial change in production. The indirect effect is the addition demand for locally produced inputs to meet the increase in production. The induced effect is the additional demand in the form of household consumption. However, a change in labor income is not the same as a change in final demand and thus it does not have the same definitions or methodology. As you noted, all of these Activity types are considered Induced purchases - purchases resulting from spending by households. Yes, the direct Labor Income is the payroll value you used to set up the Labor Income Change Activity. It is also reported as Direct Factor Income on the left-hand side of the screen. Household Income Change is also household spending, but with the assumption that these funds are either not derived from labor payments, or have already had payroll taxes and benefits removed from the entered value. A household spending pattern is considered a direct effect because this spending is not assumed to be related to (i.e., "induced") by the output of an industry in the region. We don't often recommend using them unless you want to modify the spending pattern to take out certain commodities. See these forum posts for more: http://implan.com/index.php?option=com_kunena&func=view&catid=84&id=11240&Itemid=35#11240 http://implan.com/index.php?option=com_kunena&func=view&catid=80&id=12961&Itemid=35#12961 The Direct spending here also shows the actual purchases by households in the region, whereas the remaining columns show the resultant stem-from economic activity. Hopefully this helps. --Implan Support Staff