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Economic Impact Analysis – What we can do for You!. Brian Jackson, PhD EconomicsProf.com (Example studies herein are hypothetical. We keep actual client data confidential). Impact Analysis by the EconomicsProf. Providing economic analysis for the state of a local economy.

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economic impact analysis what we can do for you

Economic Impact Analysis – What we can do for You!

Brian Jackson, PhD

EconomicsProf.com

(Example studies herein are hypothetical. We keep actual client data confidential)

impact analysis by the economicsprof
Impact Analysis by the EconomicsProf
  • Providing economic analysis for the state of a local economy.
  • Determining economic consequences of a new project or business on a local economy.
  • Estimating the tax effects of a new project or business.
example 1 modeling retail trade
Example 1: Modeling Retail Trade
  • A new McDonalds restaurant is set to begin operations in Hominy, OK at the beginning of 2010
  • First year sales are predicted to be $1.5 Million
  • Find the resulting economic impacts for Osage County (home to Hominy).
procedure and data source
Procedure and Data Source
  • Implan (IMpact analysis for PLANning)
  • Version 3.0
  • Uses Input-Output analysis with regional specific Social Accounting Matrices and Multiplier Models
  • Implan database contains county, state, zip code and federal economic statistics.
4 types of effects
4 Types of Effects
  • Employment – How many jobs will result from the activity?
  • Labor Income – What is the resulting annual income to all forms of employment income?
  • Output – What is the value of production?
  • Value Added – Total output minus cost of intermediate inputs
output some detail
Output – (some detail)
  • For manufacturers: Output = sales +/- change in inventory
  • For service sectors: production = sales
  • For retail and wholesale trade: Output = Gross Margin (not gross sales)
3 levels for effects
3 Levels for Effects
  • Direct Effect – Initial production changes or expenditures made by producers or consumers as a result of an activity or policy
  • Example: The $1.5 Million sales for McDonalds in Hominy, OK during year 1
  • Other examples: Employment, Labor Income, Value Added for the McDonalds
3 levels for effects8
3 Levels for Effects
  • Indirect Effects – The impact of local industries buying goods and services from other local industries.
  • Example – How are sales for other businesses in the McDonalds restaurant’s supply chain affected (in Osage County)?
  • Spending works backward in supply chain until money leaks from local economy thru imports or payments to value added.
3 levels for effects9
3 Levels for Effects
  • Induced Effects – Effects of change in Household income across the local economy resulting from the direct and indirect effects.
  • Example – How is employment in Osage County affected by the increased income of McDonalds employees and employees in the supply chain?
results interpretation employment
Results Interpretation- Employment
  • McDonalds restaurant will hire approximately 33.1 employees.
  • Osage County will increase by 1.5 new employees just to provide inputs to the restaurant. (Alas, beef comes from Argentina)
  • Osage County employment will increase by 1.2 as households spend more because of the restaurant.
example 2 effects of a pay raise
Example 2: Effects of a Pay Raise
  • Registered nurses with the Muskogee Regional Hospital are getting a 20% pay raise in 2010 as part of a new contract agreement with the Muskogee Regional Hospital
  • How does this action affect the Muskogee County economy?
pay raise to nurses preliminary inputs
Pay Raise to Nurses – Preliminary Inputs
  • Study Area: Muskogee County
  • Average annual income of labor group after taxes: $62,500.00/year
  • Number of workers affected: 115
  • Average percent increase in wages: 20%
  • Total increase in workers’ disposable income: $62,500 x 0.20 x 115 = $1,435,500/year
pay raise to nurses
Pay Raise to Nurses
  • Since this action involves simply an increase in household income, only induced effects are relevant.
example 3 industry sales
Example 3: Industry Sales
  • A new greenhouse is opening in Cherokee County, OK that expects to employ 25 people.
  • Find the economic impact on the area of Sequoyah, Adair, and Cherokee Counties.
types of activities we can analyze
Types of Activities we can Analyze
  • Industry Change: What is the impact of a $20MM order to Dal-Tile Co. in Muskogee?
  • Commodity Change: What is the impact of investments in agricultural improvements in Cherokee County?
  • Labor Income Change: What is the impact of a decrease in residential housing construction in Wagoner County?
types of activities we can analyze24
Types of Activities we can Analyze
  • Household Income Change: What is the impact of a pay raise to police and fire personnel? (Note: Labor and HH Income changes are related)
  • Industry Spending Patterns: The county commission wants to know the effects of contracting $7 million on rebuilding county bridges.
  • Institution Spending Patterns: A tribal health-care facility wants to know the impact of a proposed $2.4 MM healthcare program
reference
Reference

* Data and much content herein was provided by resources from the Minnesota Implan Group (MIG) and it’s Implan program.