Minnesota IMPLAN Group, inc

Minnesota IMPLAN Group, Inc. (Commonly referred to as MIG) provides software and data for economic impact analysis using the Input-output model. IMPLAN (IMpact analysis for PLANning) techniques can be used in an attempt to measure the effect on a regional or local economy of a given change in economic activity. It allows the user to build economic models estimating future impacts of similar changes on communities. The IMPLAN database contains county, state, and federal economic statistics.

Why It Exists

There was a lack of useful and timely information on regional communities creating a demand for economic data collection and reporting systems. There was already effective statistical gathering and reporting techniques for the national economy through the federal government, but those methods did not provide detailed data for local economies.

The 1976 National Forest Management Act required the USDA Forest Service to create 5-year management plans. These plans required alternative land management options, each of which have potential resource outputs (timber, range, mining, recreation) as well as socio-economic impacts on local communities resulting from the proposed resource outputs. The Forest Service, in cooperation with FEMA, contributed considerable resources to the creation of FORPLAN (a linear programming model to estimate the land management resource outputs) and IMPLAN to estimate the economic impacts on local communities.

History

In 1988 the Agricultural Economics Department Of the University of Minnesota took responsibility for Providing IMPLAN software, data, and technical support for all non Forest Service users on a fee basis.

Minnesota IMPLAN Group, Inc. was founded in 1993 as an outgrowth of the work at the University of Minnesota starting in 1984.This developmental work closely involved the U.S. Forest Service's Land Management Planning Unit in Fort Collins the University of Minnesota. At first, MIG, Inc. focused on database development and provided data that could be used in the Forest Service version of the software. In 1995 MIG, Inc. took on the task of writing a new version of the IMPLAN software from scratch. This new version extended the previous Forest Service version by creating an entirely new modeling system that included creating Social Accounting Matrices (SAMs) – an extension of input-output accounts, and resulting SAM multipliers. Version 2 became available in May of 1999.

How it Works

"Impact analysis is driven by a predictive economic input-output model,and (as with any economic model) contains several input and structural assumptions in order to draw conclusions. Structural assumptions are based solely on the model. Input assumptions are based on the data entered into the model. Impact analysis often relies on industry experts to supply input assumptions.

Impact studies involve the analysis of effects called “multipliers,” which are a numeric way of describing the impact of a change. An employment multiplier of 1.8 would suggest that for every 10 employees hired in the given industry, 18 total jobs (in all sectors) would be added to the given economic region.

Multipliers can be broken down into three pieces:

1. Direct effects take place only in the industry being immediately affected. If DEMCO lays off 39 employees, the manufacturing industry loses 39 employees.
2. Indirect effects concern inter-industry transactions. Because DEMCO is closing, they will no longer demand the locally produced supplies they needed to produce their product. This will affect all of their suppliers.
3. Induced effects measure the effects of the changes in household income. These employees may not eat out or shop as much as they normally would have since they are no longer employed. These changes affect the related industries."

See also

• http://www.d.umn.edu/lsbe/departments/bber/uploads/bber/Enter/sep00bber%20ENTER.pdf
• http://www.IMPLAN.com
• Input-Output Economics By Wassily W. Leontief