MRIO after introducing new Industry into model

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    jenny
    If the new sector is one of IMPLAN's 440 sectors, we would recommend using analysis-by-parts; this way, you will not inadvertently affect the other industries' tradeflows by creating this new sector. See this forum discussion on ABP: http://implan.com/v4/index.php?option=com_kunena&func=view&catid=84&id=11960&Itemid=35#11960 You will need to multiply your employment figure by the National Per Worker values (found under Customize > Study Area Data) to estimate the Intermediate Expenditures (which will be the Activity Level for the Industry Spending Pattern Activity), the Employee Compensation and Proprietor Income (which will be the Event values for the two Events in your Labor Income Change Activity), as well as Output, OPI, and IBT. All of these calculated values will be your direct effects. Regarding MRIO, after you have set up your Activities and have moved on to the Analyze Scenario screen, you can simply use the Add/Remove Models button to add your other regions of interest, click Select to add those regions to the analysis, then click Analyze Multi-Region.
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    erg57
    Thanks. Would tutorial 8a MODIFYING TOTAL INDUSTRY OUTPUT, VALUE ADDED INCOMES, AND EMPLOYMENT be appropriate if I need more of a "cookbook" approach to understanding ABP. Or do you know of a tutorial that introduces a new industry into an an area and then runs ABP? I have never had to do ABP either previosuly in my IMPLAN usage
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    jenny
    The beauty of using ABP is that the industry does not need to exist in the region. The national average industry spending patterns for every industry are available in every model, which means that you can import the spending pattern for an industry without making it exist in the region. When a model creates multipliers, it uses the region data (employment, output, income, etc.) and applies that data along with trade flow estimates to the national absorption matrix to create the region industry patterns. The resulting mulipliers are using our trade flow estimates for the commodities that are purchased by lcoal demands. These trade flow estimates are fixed for a given region and year, so that increasing the size of the existing industries (by introducing a new industry) would increase demand for the specified use of local commodity (for whichever commodities that new sector demands) - meaning that all other local demands would have less local commodity available. Basically, you are changing the import rates for all the other industries that demand those same commodities (which would reduce the multipliers for all industries). A better assumption would be to allow the new demands to have the existing import rates, which is why we suggest ABP. Using ABP specifies the purchase of inputs by an industry without changing the multipliers (which hold our estimates of trade flows).
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    erg57
    Thanks again, Jenny. Im trying to set it up and may have questions in near future.
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    erg57
    Im not sure Im understanding where output, OPI and IBT are fittng in via activity. Which type of activities are these? The emp and prop are labor income chnages and the intermed expend are part of the industry spending patern activity, but I can seem to figure out thise three items
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    jenny
    The direct Output, OPI and IBT do not need to be run as additional analyses. The Industry Spending Pattern takes care of all indirect effects and the Labor Income Change Activity takes care of all the induced effects. The direct Employment, Output, Labor Income, OPI, and IBT simply need to be reported as the direct effects.
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    erg57
    Thanks. So I imported the industry spending pattern and set the level to the amount of intermediate expenditures and normalized it to "1". I then set up another activity as a labor income change from extrapolotaed values of employee comp and proprietor comp (nat'l per worker * estimated number of jobs in region).
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    jenny
    Sounds good - I would just be sure to mention in your report that you are using national relationships, which may differ somewhat from the relationships the local industry would have should it actually locate in your study area.
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    erg57
    I just ran this and the MRIO and see barely any realtionship....is it likely because the indusry does not currently exist that it would not report trade relationship. I'd have figuredit's be strong. Your national caveat is understood
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    jenny
    It turns out that the imports specified by the Industry Spending Pattern and Labor Income Change are leaked out prior to the MRIO part of the analysis, so the ABP approach does not capture any first-round purchases that are made from the linked region - the effects on the other region that you are seeing include only the subsequent rounds of indirect and induced. Therefore, creating the new industry and running the impacts as an Industry Change Activity looks to be your best bet. This will affect the multipliers (downward) somewhat but if the new industry is small relative to the rest of the economy, these effects will be minor and in any case your results will be on the preferred conservative end of the spectrum.
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    erg57
    Jenny, thanks so much for doing this all via message board. It's sinking in now. ..I think. I appreciate your time today.
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    erg57
    [quote="Jenny Thorvaldson" post=12064]It turns out that the imports specified by the Industry Spending Pattern and Labor Income Change are leaked out prior to the MRIO part of the analysis, so the ABP approach does not capture any first-round purchases that are made from the linked region - the effects on the other region that you are seeing include only the subsequent rounds of indirect and induced. Therefore, creating the new industry and running the impacts as an Industry Change Activity looks to be your best bet. This will affect the multipliers (downward) somewhat but if the new industry is small relative to the rest of the economy, these effects will be minor and in any case your results will be on the preferred conservative end of the spectrum.[/quote] Are you saying maybe not to to use ABP and to just 'create' the industry in the model by customizing the study area data? In effect, I'd be adding these jobs on top of current study area and then run the MRIO? Forgive me If I misunderstood.
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    jenny
    Yes, I am saying not to do ABP and instead create the new sector, just as you had proposed to do earlier - I apologize for leading you astray. To create the industry, all you need to do is: 1. Go to Customize > Study Area Data 2. Enter you Employment figure into the Employment box at the top. 3. Select the radio button next to "Edit per worker values then update" 4. Take the National Per Worker value for Output and put it into the Per Worker box for Output. 5. Click Update and the rest of the fields will be filled in for you based off of your employment estimate and the national per-worker ratios. 6. Click Save. 7. Go to Options > Construct > Multipliers. 8. Finally, go to Setup Activities, create a new Industry Change Activity, create an Event and put in your estimated employment figure, click Next, create a new Scenario for the new Activity, then proceed with the MRIO as usual.
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    erg57
    will do. Thanks. And you did not lead me astray because Ive learned substantially just with the exercise you've provided already.
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