Using SAM vs LPP100% in construction
Hello there,
I’m working on calculating the economic impact of a construction phase of a manufacturing plant. I know that all the money of the first round of spending (direct) have been spent in local businesses/contractors, but I don’t have any info on their suppliers (second round, indirect) or where their employees spend their money (induced). Can I still set my LPP to 100% or do I need to use the SAM setting?
In general, if I have information on the location of the first round of spending, can I use LPP 100%?
And follow-up question, if you know that all the workers of the businesses receiving the first round of spending are residents of the study area, how do you make sure that the induced effect reflects that?
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Hello Fabrizio, To your first question: Local Purchase Percentage (LPP) represents the portion of the Direct Effect that takes place within the study region. If the entirety of your Direct takes place within the study region, then your LPP should be set to 100%. Most analysts determine their inputs based on the study region; therefore, the default LPP is 100%. The rates at which an industry purchases intermediate inputs locally are determined by the Regional Purchasing Coefficients (RPCs) for each commodity. These will automatically be applied. You can find more about using Local Purchase Percentage at the link below: Using the Local Purchase Percentage Field. http://support.implan.com/index.php?option=com_content&view=article&id=469 To your second question: In IMPLAN, employees are assumed to spend their income where they live. Therefore, all employee spending will be within your study region unless your region has net in-commuting. You can check for net in-commuting by navigating to Model Overview > Social Accounts > IxC Social Accounting Matrix and looking for a value in the Employee Compensation column's payment to the Domestic Trade row. If there is no value, then your region is not net in-commuting. If there is a value, then some of the Employee Compensation earned in the region is leaked to account for in-commuters. You can adjust your study values to increase, decrease, or remove (in your case) any value lost to in-commuting by following the instructions in the article below. Estimating Employee Compensation Adjustment for Known Commuting Rates http://support.implan.com/index.php?option=com_content&view=article&id=254:254&catid=230:230 Regards, IMPLAN Staff
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