Economic Impact of Higher Education Institution

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    IMPLAN Support
    Hello Fabrizio, Impacting sector 532 and utilizing a Labor Income Change will result in the same Induced Effects if the same Employee Compensation (EC) value is applied to the system. The differences are in how you input your values and how results are displayed. • You can only enter EC as an input value when using a Labor Income Change (technically you can also enter Proprietor Income, but you would not in this case as you are working with a public university) and only induced Effects will be provided. • With Sector 532, you can enter Industry Sales, Employment, or Employee Compensation. Therefore, if you only knew employment, you could enter your employment value and allow IMPLAN to determine Industry Sales and Employee Compensation. Do note that you should enter your loaded payroll as an Employee Compensation value and let IMPLAN determine Industry Sales. These special payroll sectors hold all value-added, which includes a Capital Consumption Allowance (i.e., depreciation) as part of Other Property Income (OPI). The Capital Consumption payment is treated as a leakage and will not generate impacts. Provided results include your Direct Effect and Induced Effects. The decision between using a Government Institution Spending Pattern or converting your expenditure data to IMPLAN's sectoring scheme depends on your personal preference and the needs of your study. Based on the broad nature of your provided category examples, the conversion process would require assumptions on your part. You may want to consider the hybrid approach of using a Government Institution Spending Pattern as a base and altering it to better represent your expenditures. If you do decide to use the Government Institution Spending Pattern, be aware that payroll is included as part of the spending pattern. If you intend to capture payroll separately (as discussed above), you can remove payroll from your spending pattern. You can find more information about working with Institution Spending Patterns at the link below. Working with Government Institution Spending Patterns http://support.implan.com/index.php?option=com_content&view=article&id=481 Regards, IMPLAN Staff
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    ffasulo
    Thank you, this is helpful. I'm still organizing the data that the university gave me, but I'm leaning towards the Labor income Change for payroll, and a modified Institutional Spending Pattern for the operational budget. I have a quick follow-up question: The university has given me data on where employees live and where the money of the operational budget is spent. Can use this information to assess my LPP? In other words, if i know that 35% of employees live in my geographical study area, can I enter 35 of payroll there and set the LPP to 100%. Can I do the same for the operational budget?
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    IMPLAN Support
    Hi Fabrizio! Thank you for your follow up question about LPP. In your example, you can set LPP to 100% for your Labor Income Change Activity to reflect that 100% of the 35% of the Income will be spent in the study region. However, you will need to consider IMPLAN's commuting rates: http://support.implan.com/index.php?option=com_content&task=article.edit&id=254 In regards to the Institution Spending Pattern: Local purchasing in IMPLAN needs to be evaluated on the basis of where the local purchase took place. For example; if the local purchase of office supplies was with a local wholesaler then, you would only adjust the LPP for the wholesale Sector. However, this process is not straightforward because more than just office supplies are purchased through local wholesalers in most spending patterns. In order to accommodate for this, the coefficients of Wholesales spending ‘unknown’ origin and wholesale spending local would need to be split before LPP adjustments could occur. In addition to recognizing this split for the purpose or knowing where the LPP should be applied, it’s also important for determining how much of the coefficient of purchase belongs to a local retail or wholesaler vs. how much should get distributed in the Value Chain based on Margins. For purchases made through local retailers/wholesalers the value of purchase needs to be appropriately distributed to the retail, wholesale, transport and production components. Manually margining a Spending Pattern: http://support.implan.com/index.php?option=com_content&view=article&layout=edit&id=473 I have also attached a University study: "Using IMPLAN to Evaluate Public Universities Regional Economic Impacts" [attachment=718]h2f997f7.pdf[/attachment]
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    ffasulo
    So, I modified my Gvt Institutional Spending Pattern for Education, and now I'm trying different scenarios for the payroll and for the analysis-by-parts vs a cumulative scenario with all the activities. Few questions: • Despite using the same amount of employee compensation, I get a huge difference in the total output between labor income change and industry change (sector 532). While the induced effect is the same, LIC doesn’t give you direct effect, which is instead calculated through sector 532. Which one is the best/more correct option? • Finally, if I consider just payroll and operational budget, in analysis by parts - similar to your resource on “Working with Government Institution Spending Pattern" - my total direct effect output is lower than the sum of payroll and operational budget (what you call University Operational Value). That is the case also in your notes, but then it is suggested to replace it with the known value of the University output. Why? I should also add that, since the university provided me with geographical information on all expenditures, my LPP is at 100%. Thank you, Fabrizio
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    ffasulo
    Another quick follow-up question: When I enter my loaded payroll in Sector 532 as Employee Compensation, the system automatically calculates industry sales and employment. Is that employment (which then shows up as direct effect employment) supposed to be my university employment? Or is the employment supported by the employees spending? Thank you!
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    IMPLAN Support
    Hello Fabrizio, A Labor Income Change does not provide Direct Impact results (including Direct Tax Impacts). However, sector 532 does. This is why your Total results are so different. When using a Labor Income Change, you need to add your Direct Values back into your results to see your Total Values. Both avenues are valid, and the choice of which is best depends on user preference and intended use. The results provided from a Government Institution Spending Pattern are split into Direct, Indirect, and Induced. However, the Direct Effects are actually the first round of Intermediate Expenditures. Therefore, you need to add your Direct Effects and Indirect Effects to generate your total Indirect Effects. Then you add your Payroll Scenario results, (which will be both Direct and Induced). Finally, you need to replace the Direct Output value (which at this step only reflects payroll) with the university's total operation value. The employment generated when entering an Employee Compensation value in sector 532 reflects university employment. If you have a known employment value, you can override the generated value with your own. Regards, IMPLAN Staff
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