Direct/indirect labor and spending apportionment in industries with high subcontractor use

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    Candi Clouse

    New construction and maintenance/repair are treated differently. New construction is considered a capital purchase, which is a final demand (not an intermediate demand). Therefore, new construction contractors and subcontractors do not appear in any Industry’s production function. So, in new construction the contractors and subcontractors are found in the Direct Effect as proprietors.

    Maintenance and repair is not considered a final demand, therefore it can be purchased by Industries.So for maintenance/repair, contractors and subcontractors are found in the Indirect Effect.

    For other Industries like ride sharing companies or real estate, it depends on how they are classified. Some people will be wage and salary employees and therefore in the Direct Effect. All contractors (outside of new construction) will show up in the Indirect and Induced Effects.

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    huberthensen

    Interesting. Thanks for clarifying the difference!

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