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Economic impacts from child tax credit

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mrhaynes

Hello,

I am attempting to estimate the economic impacts on our local county from the federal child tax credit. I used ACS data to identify the number of families and children in each household income bracket, and then distributed the funds accordingly using IMPLAN's household income change activity for the appropriate income levels.

The results show only induced impacts, which is what I would expect. But I'm unsure exactly how to calculate the direct effects. I assume the direct effects for employment would be 0, since the additional income is not in itself creating any new jobs. But I'm unsure about the values I should use for labor income, value added, and output.

I appreciate your help,
Monica

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    Michael Nealy

    Good morning Monica! 

    So in short, Household Income Events allow you to model changes in Household Income that are independent of production and payroll, and the Event Value should include all new household income for all residents in the region. Because Household Income Events only affect household spending, there will be no Direct or Indirect Effects, only Induced - which stem from Income being spent throughout the Selected Region. Learn more about those Effects in the article How IMPLAN works. 

    Hope this helps!

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    mrhaynes

    Hi Michael,

    Yes, that helps. So in the case of my model, the total effects ARE the induced effects? I guess I was confused because the induced effects are smaller than the initial increase in household income. I suppose that's because some families are not spending the income but saving?

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    Michael Nealy

    Yes in the case of a Household Income Event, the total effects will be equal to Induced. Regarding the Induced Effects being smaller than the increase in HH Income, which effects are you referring to? I.e. Output? Labor Income? Etc. It may be useful if you elaborated a little further on your project setup, and I will attempt to replicate your results. 

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    Michael Nealy

    So a couple of things here: first, HH income level $60,0000 to $74,999 is not a HH income level that IMPLAN has in it's tool. So that additional income would need to be broken down into either Households 50-70k, or Households 70-100k to accurately reflect your data (please ignore if you have already done this).

    Secondly, the discrepancy between your inputted total HH Income increase and the resulting Induced Output is due to Leakages. For a Household Income Event, Total Output in the results reflects how much of the household income entered in the Event is spending that goes to local industries, plus the additional spending to local industries that is supported by that locally spent income. Economic activity associated with the modeled Event that does not generate additional effects in the defined Region are those Leakages. Like you mentioned, Leakages are seen in the form of savings, but are also present as taxes, profits, imports and commuting. Because your project has a relatively small study Region, I would imagine that the the main reason your Total Output is below the additional Household Income earned is due to the Households spending money outside of St. Louis County. Those dollars are "leaking" out of your study area, and thus would not be included in the resulting effects. 

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