Research and Development organization

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    IMPLAN Support
    Hello Monica, Since this is an analysis-by-parts approach, the spending that you’re entering into IMPLAN is the first round of indirect purchases.  So, using the R&D commodity may not be appropriate for your unknown line items.  Consider instead importing the spending pattern for industry 456, delete the rows for which you have known data, normalize the events, and then use an event level of the same dollar amount of your total unknown expenditures.  That will average the unknown spending across the commodities that industry 456 usually purchases, but without giving any more money to the commodities where you know the amount spent.   You’re right that isolating the new spending is an important consideration.  If you choose to model some spending that might not be new to a region, we would recommend describing that assumption when presenting your results.  You could report the impact of new spending distinctly from not-new spending.  If the composition of the new vs. not-new spending is the same, you could take a percentage of your direct, indirect, and induced results to classify some as new.  If the composition is different, you will need to do the modeling in two parts, but following the same methods.   Whether the identification of economic effects as being “new” is important depends on the context of your work and how it will be used.  If you are trying to say something like, “If this institution were to disappear, the loss to the area would be _____,” then you probably want to consider only new spending, since, as you said, much of the funding that supports the R&D institution would be spent on a different local institution.  In effect, your R&D institution is supporting intermediate demand for its output from the local entities that support it.  The point of contribution analysis usually is not to model net new economic activity in an area, but rather to describe the indirect and induced economic activity supported by the industry in question.  That said, IMPLAN’s recommended contribution analysis methods attempt to take account of this (this is why you divide by a detailed multiplier in the single-industry approach or zero-out RPCs for multi-industry contribution), so that you are not over-counting the effect of the industry’s contribution.   Also, make sure to remember to account for labor income that the R&D institution pays its workers.  You could do this via an industry change event in sector 517, Private Households, which will be akin to an Employee Compensation Labor Income change event (the ordinary way recommended for ABP), except that it will identify direct EC and household-paid taxes in the results.  Note that the direct labor income won’t “disappear” with an industry change event in 517, as it would with a Labor Income Change event. Regards, IMPLAN Staff
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    mrhaynes
    So, for your first point, are you suggesting that I run two separate activities for the Analysis by Parts – one with known and one with unknown line items? Plus another wage activity? I had intended on doing a normal employee compensation labor income change for the analysis by parts. Are you recommending I use the alternative method (517 industry change event) instead? This is the first time I have heard of this method. I appreciate your comments about the new vs not new spending. I think I might use your first suggestion of describing the assumption that some of the spending is from “not new” sources (i.e. state funds) but to also provide an estimate as to the portion of the impacts that are new, based on the percentage of funding that sourced locally. I believe that is what you are suggesting. If not, please let me know. Thanks again, Monica
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    IMPLAN Support
    Hello Monica, "So, for your first point, are you suggesting that I run two separate activities for the Analysis by Parts – one with known and one with unknown line items?" Yes. The modified spending pattern for unknown expenditures allows you to split your total unknown expenditure value across the remaining expenditures list for the industry. Your other activity would capture your known expenditures. "Plus another wage activity?" No. You only need to run one activity to capture your entire payroll. "I had intended on doing a normal employee compensation labor income change for the analysis by parts. Are you recommending I use the alternative method (517 industry change event) instead? This is the first time I have heard of this method." You certainly can use a Labor Income Change to capture your payroll. This is the most common method and the one presented in our articles about Analysis-by-Parts. The use of sector 517 is simply an alternative approach. Sector 517 can be used as a shortcut for capturing payroll because the sector does not contain Intermediate Expenditures. The Output for sector 517 equals Employee Compensation. The advantage to this method is that you do not have to add your Payroll Direct Effects back in as you would with a Labor Income Change. One thing to be aware of when using this method, and not mentioned previously, is that you will have Direct Impacts in sector 517 in your detailed results. You can relabel these Direct Impacts as being associated to your target sector (456). Regards, IMPLAN Staff

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