Industry #20 Event
Hi! I'm analyzing an industry change in #20, oil and gas extraction. I've customized the study area data for this industry for my study area (Lincoln, Sublette, and Sweetwater Counties in WY). I'm using the 2011 IMPLAN model. I customized the study area data for #20 to reflect 4,500 jobs, $3,022,222 in TIO per job,and $128,506 in labor income per job. I set the GDP and output deflators to 1.00. Then I analyzed a scenario involving a #20 industry change of $104,423,000. Results show 32.8 direct jobs, as opposed to the 34.5 direct jobs as I intended, based on the per-job levels specified above. (Direct labor income per job is correct, at ~$128,500.) In other words, direct jobs are ~5% less than intended and expected. This difference suggests to me something to do with the inflators, but I'm not sure what the problem is. Any suggestions?
Hi Nicholas! Thank you for your post and the detailed information you provided. I was able to run my own Model based on the information given and my Results did generate 34 Direct Employment. I have attached a screen shot as to how I set up my customized Sector #20. Order of Operations in this screen is very important, starting at the top with Employment, followed by the Output value and then your Labor Income Value/worker. I assumed that your Labor Income value was in Employee Compensation rather than Proprietor Income. [attachment=656]h9ba84c1.jpg[/attachment] I also wanted to ask for clarification purposes, when you say that deflators are set to 1.00; do you mean that both Event Year and Dollar Year for View are 2011?
First, thanks for your clear response. I re-customized #20 as you suggested, reconstructed the multipliers, re-analyzed the event I described previously, and got the same (correct) employment result as you: 34.6 jobs. So it worked! Second, in response to your question, my event year and dollar year are both 2014. Also, your assumption that the labor income value is employee compensation is correct.
Hi Nicholas, Thank you for the clarification on your Event Year and Dollar Year for View. When the GDP and Output Defaltors are 1, the EY is matching the year of the base data. In your example, the base data year is 2011 and EY is 2014 which, assuming is when the impact is occurring. The GDP and Output Deflators then adjust the values to the base year of the data. If you artificially adjusted the Defaltors to 1, then there will be in this case, no deflating to the base data year. Our concern here is that you are in effect telling the Model that it doesn't need to make any adjustments to the Industry relationships to translate those relationships back to the 2011 data. The primary function of deflators in the Model is to translate current year dollars back to the year of the odf file, because the Multiplier relationships are fixed in those relative dollars. Thus a 2011 Model reflects purchasing values and relationships as they occurred in 2011. If no adjustment is made for inflation, in most industries, not applying deflators will result in overestimation. Even though setting your deflators to 1.00 prevents you from seeing the effects of deflation on your specific Industry (Direct Effect), this forced adjustment doesn't affect the estimation of Indirect and Induced Effects and the fact that those, if we understand your Model setup correctly, are being calculated on the basis of 2011 relationships, but in 2014 equivalent dollars. We are looking into how much of an impact this might have on your results and will get back to you.
Hi Nicholas! Ideally rather than the value of the tickets, if you can obtain it you would want to include the equivalent value of the services provided in your Industry Sales. However, we know that typically that is unlikely, so you can use the ticket value as a proxy. The one other thing you may want to consider is if you can determine how the service providers are using the tickets. If they are using them in lieu of compensation for his workers, then you would want to pursue the Analysis-by-Parts methods so you could reduce the Induced Effects for the workers of those service providers. Thanks!
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