Table Of ContentHistoric, Archive Document
Do not assume content reflects current
scientific knowledge, policies, or practices.
^
IMPLAN
IKJlO^ViJDfA\ United States Using to Identify
Department
ofAgriculture
Development^
Forest Service Rural
%
Intermountain
Research Station Opportunities
—
General Technical
Report lNT-GTR-350
May 1997
David W. Holland -0
Hans T. Geier
b3
Ervin G. Schuster
Export Base Rural ^
Exports
Community
Import Substitution
Development <^ Imports
Rural-Urban Linkages
.
The Authors economics and the tool of input-output analysis, this
paperexploresthreedevelopmentstrategies:expanding
David W, Holland is Professorof Agricultural Econom- and retaining the economic base, substituting local pro-
ics, Department ofAgricultural Economics, Washington ductionforimported commodities, and exploiting urban-
State University, Pullman. His researchconcentrateson rural linkages.
use of regional, multisector models for public policy The procedures developed in this study resulted from
analysis. He holds B.S. and M.S. degrees in economics aniterativecasestudywhereproceduresdevelopedand
from Colorado State University, and a Ph.D. degree in tested in one community were improved and applied to
agricultural economics from Oklahoma State University another. Data came from the Forest Service's IMPLAN
in 1972. system and REIS data from the U.S. Department of
HansT. Geler is a Research Associatewiththe Univer- Commerce, Bureau of Economic Analysis.
sity of Alaska, Fairbanks, where he works on natural Before IMPLAN is used to help identify development
resource policy analysis. Formerly, he was a Research opportunities for acommunity, the IMPLAN model used
Associate with the Department of Agricultural Econom- must accurately reflect the local economy. Procedures
ics, Washington State University. Geier received a B.S. for validating the IMPLAN database, "ground truthing,"
improving regional trade estimates, and more are dis-
degree in history and agricultural business from South-
cussed. The case study presents some results from
west Minnesota State University, a Master of Adult and
Continuing EducationfromWashingtonStateUniversity, Malad City, ID, a ranching community in southeastern
and an M.S. degree in resource management from the Idaho.
University of Alaska, Fairbanks in 1993.
Ervin G. Schuster is a Research Forester and Project Contents
LeaderfortheEconomicAspectsofEcosystemManage- Page
ment Research Work Unit, U.S. Department of Agricul-
ture, Forest Service, Intermountain Research Station, Introduction 1
Regional Economics and Rural Development
Missoula, MT. His research includes modeling timber
harvest and supply, timber sale economics, and rural Strategies 1
development. His academictraining inforestryand eco- Central Place Hierarchy 2
nomics was taken at the University of Minnesota and Export Base 2
IowaState University,wherehereceivedaPh.D.degree Import Substitution 2
Rural-Urban Linkages 3
in forest economics in 1971
Methods 3
Data Used 3
Research Summary Procedures 4
Building an Accurate IMPLAN Model 5
The U.S. Department of Agriculture, Forest Service Results—the Case of Malad City, ID 9
has historically been concerned with the effects of its Export Base 9
programs on rural communities. Agency emphasis has Import Substitutions 12
recently changed from promoting community stability Rural-Urban Linkages 16
through a stable timber supply to revitalizing and di- Discussion 18
versifying rural communities. However, localcommunity Economic Intelligence and Rural Community
leaders and Forest Service personnel do not always Development 18
know which development opportunities might prove Caveats 18
successful. Using concepts from the field of regional References 19
Intermountain Research Station
324 25th Street
Ogden, UT84401
IMPLAN
Using to Identify Rural
Development Opportunities
David W. Holland
Hans T. Geier
Ervin G. Schuster
Introduction toolsandmethodsofregionaleconomicanalysis. Such
an approach wouldrecognizethat rural communities
TheU.S. DepartmentofAgriculture,ForestService existwithinatieredframeworkofeconomicallyinter-
has historically been concerned with effects of its related areas. According to central place theory, eco-
programsonruralcommunities. Fromlegislativelan- nomicregionsmaybedefinedonthebasisoffxuictional
guage in the Organic Act of 1897, to a concern with economic areas; a region containing an urban center
community stability under the Forest Management provides selectedgoods and servicestoasurrotmding
Act of 1944, to the more philosophical language in ruralperiphery. Opportunitiesforbetterunderstand-
the 1990 RPA Program on Rural Development, the ingeconomic developmentin rural regions may stem
ForestService'scommitmenthasremainedsteadfast. from understanding those economic linkages.
However, the nature of agency involvement with Furthermore, in describing the economy ofa rural
ruralcommunitieshaschanged.Atonetime,theForest community,regionaleconomistscarefullydistinguish
Service saw its role as contributing to community between basic and nonbasic economic activity. The
stabilitybypayingspecialattentiontosustained-yield extenttowhichtheseregionaleconomicthemescanbe
forestry. In recent years, the need to manage for pro- incorporated into identification ofeconomic develop-
tectionofendangeredspeciesandincreasedrecreation mentopportunitiesinnaturalresourcebasedcommu-
hasconstrainedtimberharvestsonNationalForests. nities in the West will be explored in this paper.
Theidealofpromotingcommunitystabilitythrougha Ourapproachcombinesideasfromregionaleconom-
stable timber supply has given way to land manage- ics with the analytical tool of regional input-output
ment policies that, all else being equal, have had a analysis to operationalize community-specific devel-
negativeeconomicimpactonwoodproductsindustries opmentstrategies(Jensenandothers 1987).Thetech-
(Waters and others 1994). In response, the agency's nology of constructing regional input-output models
community emphasis has evolvedtothat ofrevitaliz- hasbeenrevolutionizedinrecentyearswiththedevel-
inganddiversifyingruralcommunities.In"AStrategic opment ofIMPLAN (Taylor and others 1993) by the
Planforthe90's WorkingTogetherforRuralAmerica" ForestService.ThispapershowshowIMPLAN(IMpact
:
(Robertson 1990),oneForestServicegoalistodevelop analysisforPLANning)regionalinput-outputaccounts,
andprovidetimelyandcurrentresearchandresource whencombinedwithregionaleconomictheory,canbe
information on rural development opportunities. used to identify possible opportunities for rural eco-
But what are these opportunities? In many cases, nomicdevelopment.MaladCity,ID,providesillustra-
localcommunityleadersandForestServicepersonnel tive case study results.
do not know which development opportunities might
prove successful. In "Forest Resource Strategies for Regional Economics and Rural
Rural Development," Thomas (1992) identified seven ______
strategies: (1)organizingforresource-basedeconomic Development Strategies
development and conservation, (2) targeting value-
addedprocessing, (3)targetingalternative goods and Regional economics suggests at least three general
services from the forest resource, (4) enhancing pro- approaches to rural economic development: (1) re-
tention and expansion of the existing export base,
ductivity, (5) strengtheningmarketing, (6)promoting
technology transfer, and (7) improving local human (2) substitution oflocal production for imports, and
capital. Many efforts ofForest Service rural develop- (3) expansion ofrural to urban economic linkages
ment practitioners fall into these categories. (a variant on export expansion). Before we elaborate
However, little has been done to address the prob- these themes, we review the role of central place
lemofidentifyingdevelopmentopportunitiesbyusing theory in economic development.
1
,
Central Place Hierarchy Export Base
This study focused on identification of rural eco- The export base of a regional economy consists of
nomic development opportunities, always mindful of thosegoodsandservicesectorsthatsellalargeportion
possibleeconomicopportunitiesresultingfromcentral oftheir products outside the region. Such industries
placegeography. Centralplacereferstourbancenters. are known as "basic" industries. Often the economic
Theideaisthatageographicregionwillbecharacter- structure ofa region is divided into two parts: basic
izedbyahierarchyofurbanplaces,rangingfromsmall £uidnonbasic.Thenonbasicindustries servemarkets,
rured towns to larger towns to major urban centers. such as consumption by households and basic indus-
Eachcommunity supplies certaingoods and services, try, that are largely inside the region.
reflectingits roleinthe service areahierarchy. Major According to the export base theory ofeconomic de-
urban centers supply specialized goods and services, velopment, aregionwill specialize inthose exportsin
suchasselectedmedicalservices,totheentireregion. whichithasacomparativeadvantage(Tiebout 1962).
Recognizing the economic linkage between rural The key to regional economic growth, according to
communitiesandhigher-ordered,centralplacesinthe export base theory, is to identify those industries in
functionaleconomicregionisimportanttoidentifying whichtheregionenjoys acomparativeadvantageand
possibleruraldevelopmentopportunities Forexample pursue public policies that assist expansion ofexport
.
rural economic opportunities might include goods or baseindustries. Exportbaseindustriesdonothaveto
services markets such as tourism or outdoor recre- becommodityproducers. Forexample, servicesectors
ation that stem from the central place. In the case of selling to tourists can be part ofthe export base.
unemployed rural labor, seeking employment in an A modern variant of the export base strategy is
expandingcentralplacelabormarketmaymakemore knownasbusinessretentionandexpansion. Theidea
sense than remainingin the rural labor market. istoidentifythoseindustriesthatmakeuptheregion's
The notion of economic "spillovers" is the other export base and then undertake public policies to
reason central place geography is important in rural support and expand those industries. Expansion of
economic development. Secondary and induced eco- exportbase industries leads to expansion ofnonbasic
nomiceffects(spillovers)stemmingfromdirecteffects industries through the "multiplier" or ripple effect.
in rural communities are likely to affect the rural The difficulty with identifying a region's export
community in a somewhat limited way. Instead, a base is that there are no publicly available data on
large portion ofthose effects will spillover to higher- tradeflows(importsandexports)forsub-Stateregions
orderedcentralplacesinthefunctionaleconomicarea in the United States. However, those data are rou-
(Hamilton and others 1994). In other words, the eco- tinelydevelopedwhenregionalinput-outputaccounts
nomicimpactofruraldevelopmentinruralcommuni- are generated, as through IMPLAN, for any county
tiesislikelyto bemanifestedmainlyinnearbyurban or combination of counties in the United States. To
places.Thismeansthateconomicallyexpandingrural evaluate the possible use ofsuch accounts to identify
communities generate increased opportunities for regional trade in the form ofimports and exports, we
goodsandservicessuppliersintheregion,butoutside generatedaprocedurethatwouldidentifythecurrent
the rural community. Similarly, economically con- trade structure ofa given case-study region as well
tractingrural communities will affect service provid- aschangesintradecharacterizingtheregionthrough
ers in central places in a negative way, as in the case time.Inthisway,wewouldgetabetterunderstanding
ofreducedtimberharvests (Waters andothers 1994). ofthe region's economic base.
Dataforthis projectwereorganizedtodepictsmall,
rural communities (the case study regions) as well as Import Substitution
the majorurban trade centerinthe functional region
where the community was located. To do this, we Economies are typically interconnected. Commodi-
identifiedandadoptedaschemeofcentral-place,multi- ties produced in one region often use goods and ser-
countyaggregates. Three suchempiricalschemes are vices (inputs) imported from outside the region. This
known to exist: (1) U.S. Department of Commerce, causes an economic leakage, because some of the
BureauofEconomicAnalysiseconomicareas,(2)U.S. receiptsfromsalestooutsidemarketsmustbeusedto
Department ofAgriculture, Economic Research Ser- pay for imported inputs. "Import substitution" refers
vice commuting zones and labor market areas, and to replacing imported goods and services with goods
(3) Rand-McNally retail trade areas. We choose the and services produced in the local community. When
1977-based Bureau of Economic Analysis regionali- economic leakages are plugged, the ripple effects
zation scheme to identify core communities and the from a given export base are strengthened. Import
surrounding rural periphery regions for the case substitution, as an economic development strategy,
study economies; the 1977 scheme was recently has fallen out offavor in the international economic
updated.
2
development literature. Economists in favor of free evaluate,andrefinethemethodologytoidentifydevel-
trade arequicktopointoutthatdevelopingcountries opment opportunities. They recommended 10 candi-
that followed an import substitution strategy invari- date communities from the rural, Northern Rockies.
ably set up economic barriers to limit access to their From these, we selected three communities, repre-
domestic markets (Gillis and others 1992). Conse- senting different kinds ofeconomic base and indus-
quently, the protected domestic industries never be- trial structures:
came economically efficient. This can result in low Community Economy Central Place
productquality,relativelyhighprices,andthegenera-
tion ofprofits primarily through rent-seekingbehav- Choteau, MT Ranching and Great Falls, MT
ior in the political arena. Overall, this pattern of recreation
economic development could not be sustained in the MaladCity,ID Ranching SaltLakeCity,UT
WA WA
face ofcompetition from the rest ofthe World. Republic, Timber Spokane,
In regional economic development, noncompetitive Several features of these communities relative to
barriers to trade, so problematic in national policy, theIMPLANdatabase shouldbenoted. TheIMPLAN
are a nonissue. It simply is not possible for regional system is based on county-level accounts. Ifan indi-
governments to erecttrade barriers; theydonothave vidual county's regional economic data are to be
thepoliticalauthoritytomaketradepolicy. Theprob- representativeofaruralcommunity,thatcommunity
lem attheregionallevelismorepractical: identifying must economically dominate the county economy. In
the current importmix and deciding, outofthatmix, other words, the community must be the location of
which goods and services may be good candidates for most of the income and employment in the county.
importsubstitution.Importedcommoditieswithlarge Thiswasthecaseforeachofthecase studycommuni-
regional sales are obvious import substitution candi- ties, so even though we used county-level data to
dates for further study, as are imported commodities construct the regional accounts, the resulting eco-
thatmaynotofferalargemarketatthe presenttime, nomic models are largely representative ofthe domi-
but seem to be characterized by high rates of past nant rural communities.
growth that can continueinto the future. Ingeneral, itwouldbeincorrecttouse county-level
data to model a given rural community because the
Rural-Urban Linkages
countywilltypicallycontainseveraleconomicallysig-
nificant communities. Thus, IMPLAN-based county
The strategy of enhancing rural-urban linkages
may be viewed as a subset ofthe classic export base models are generally, and correctly, thought of as
regional models that include several communities.
expansionstrategy.Thebasicthemeistofirstidentify
However, in the sparsely populated rural West, data
the rural community's export base and then relate
forselectedcountiescanindeedberepresentativeofa
thatbasetomarketsinnearbyurbancenters(Holland
single community.
and others 1992). This strategy may lead to export
enhancement in the form ofincreased sales from the It should be noted that the option ofconstructing
regional input accounts on a zip code basis has re-
rural community to the urban region. The idea is to cently been added to IMPLAN (IMPLAN Group Inc.
identify the goods and services purchased by the
1994). This was not an option when this study was
largerurbaneconomyandconsiderproducingthemin
conducted. Byusingzipcodesratherthancounties as
the local, rural community. This is a form ofimport
substitution for the larger, regional economy and a the unit of analysis, it should be possible to more
accurately depict an individual, small community
form of export base expansion for the local, rural
economy. The ability to build true community-level
economy.
modelshasbeengreatlyenhancedbytherecentaddi-
tions to the IMPLAN database, making the proce-
Methods
duresdescribedinthisdocumentmorerelevanttothe
study ofrural communities. However, there is some
The methods developed in this study resulted from danger in building input-models for very small com-
aniterativeprocedure,wherewedevelopedandtested munity economies. When there are very few firms in
methods in one community, improved them, and ap- selected sectors inthe model, the assumptionoffixed
pSleirevidcte'hsemIMtoPaLnAotNhesry.stWeemuasleodngdawtiathfrtohmetBhuerFeoaruesotf bperovpioorltaitoend.input-outputrelationshipsismorelikelyto
Economic Analysis' (Regional Economic Information
System) (REIS) data. Data Used
ForestServiceruraldevelopmentcoordinatorsfrom
the Northern (R-1), Intermountain (R-4), and Pacific RequiredIMPLANdatawereobtainedfromDr.Eric
Northwest(R-6)Regionswerecontactedandaskedto Siverts, a regional economist formerly housed in the
recommend case study communitylocationstoapply. ForestService'sLandManagementPlanningSystems
3
Unit located at Fort Collins, CO. Additional regional thatexperiencedrapidrates ofexportgrowthwere of
data were obtained from REIS, State-level Depart- special interest, because they are likely candidates
ments ofEmployment Security, andthe U.S. Depart- for future expansion. Commodities with negative
ment ofCommerce, Bureau ofthe Census. growthornogrowth,whicharealsoanimportantpart
IMPLANisapersonalcomputer-basedsoftwarepro- of the existing export base, may be candidates for
gram and regional database originally developed by business retention efforts.
the U.S. Forest Service (see Taylor and others 1993). Import Substitution—For a given regional
The IMPLAN program is used with the IMPLAN economy, the IMPLAN Regional Trade Report iden-
regional database to construct regional economic ac-
icnountthse.UInMiPteLdANStadtaetsa.aTrheeavIaiMlPabLlAeNfordeavtearbyasceouanntdy ttihfrieees-drieggiitonSaIlCilmepveolrtosfsbeyctcoromdemtoaidli.tAyRaetgiroonuaglhlTyratdhee
Report was constructed to represent the economy in
softwarecanbeobtainedfromtheMinnesotaIMPLAN
1982 and 1990, the most recentyear with data. Real
Group, Inc.MN(1940 South Greeley St., Suite 201, changes in regional imports for each commodity
Stillwater, 55082).
were calculated by spreadsheet manipulation ofthe
The Regional Economic Information System is a IMPLANtradereports.Wewereespeciallyinterested
system ofregional data generated and maintained
in the current import structure and changes in that
by the Bureau of Economic Analysis, U.S. Depart-
structure over time. Absolute changes, as well as
mentofCommerce. The REIScountydataonemploy-
rates of change (growth rates), were calculated.
ment and personal income are available for every
Commodities characterized by either high levels of
U.S. county for recentyears on a CD-ROM available
imports or high rates of import growth over time
fromBureauofEconomicAnalysis.TheREISdataare
became candidates for further study.
generally viewed as the most accurate source of re- IMPLAN
Additionalscreening,outsidethe accounts,
gional economic information. These data can be ob-
involved consideration of economic competitiveness
tainedfrom several sources, butthe easiestwayis to and factors influencing the economic viability of re-
contact the Bureau ofEconomicAnalysis, Economics
gional supply. Manufactured commodities requiring
and Statistics Administration, U.S. Department of
complex industrial processes or economies of large
Commerce, Washington, DC 20230.
sizewereeliminated. Forexample, refinedpetroleum
products are a large component ofthe import bill in
Procedures
nearlyallruralcommvmities,butarenotHkelycandi-
Thebasicapproachwastoexploitthesector(industry) dates for import substitution given current technol-
detail andlongitudinalfeaturesoftheIMPLANdata- ogy. Also screened out were natural resource-based
base. With IMPLAN, regional input-output accounts commoditiesassociatedwithresource-basedproducts
cannowbeconstructedforselectedyearsoveraperiod knowntobeabsentintheregion.Aregionmayimport
starting in 1977. The IMPLAN database has been alargeamountoflumber;butifthereisnonearbylog
annually updated beginning in 1990. The intention supply, then a sawmill is not likely to be a very good
wastouseregionalinput-outputaccountsforthecase idea as animportsubstitution strategy. Byscreening
studyregionstostudyreal(inflation-adjusted)changes the input-outputtrade accounts, we identified poten-
in selected variables at a high level ofsector detail. tialbusiness(importsubstitution)opportunities,with
IMPLAN allows the user to produce a number ofop- asmuchproduct-specificityastheinput-outputtrade
tional input-output accounts. Analyses mostly used data would support. Screening trade data is only an
the IMPLAN Regional Trade Report (MID.005) and intermediate step in fully developing an import sub-
the Regional Final Payments Report (MID.107). The stitution strategy. Actual business opportunities are
following discussion assumes the reader is familiar very product-specific and require detailed feasibility
with the IMPLAN input-output system and its studies. This presumably would be done by commu-
terminology. For additional information see Taylor nity individuals or officials interested in starting or
and others (1993). expanding a business.
—
Export Base—Procedures for studying the export Rural-UrbanLinkages ThesameRegionalTrade
base ofthe rural region involved use ofthe IMPLAN Reportusedearlierforimportsubstitutionwasused
Regional Trade Report to identify goods and service to identify possible opportunities for strengthening
exports from the region and how those exports have rural-urban trade center linkage (Robison 1992).
changed through time. The Regional Trade Report Regardingtheurbantradecenter,twoquestionsneed
estimates all exports and imports, by commodity, for tobeaddressed:(1)Whataretheimportrequirements
the rural region. Data from 1982 and 1990 were ofthe regional trade center? (2) How has the import
analyzedwith aspreadsheet. Bothgoodsandservices bill been changing through time?
weregivenattention. Commodities(goodsorservices)
4
For each rural community studied, IMPLAN was Whenthere aredisclosureproblemsinREIS, stem-
usedtoidentifytheimportstructureoftheassociated ming from only one or two firms in a given sector,
urban trade center and how that structure has been employmentinothersecttHs,suchasy econstruction
changing through time. The procedure described for sector, will also be deleted to more fully protect the
identifying commodity imports of the rural commu- privacy and confidentiality ofthe firm(s) in the first
nity was applied to the trade accounts for the urban sector. Obtain emplojnnent numbers gathered from
trade center. informedlocalsourcestofixidentifiedsectors(suchas
The export, orsupplypotentialoftherural commu- large resource-basedfirms)intheREIS Employment
nitywas identifiedwiththe IMPLAN regional export Table, and estimate the other sector (such as con-
accounts for the rural community. Based on the re- struction)tobeconsistentwiththeREISemployment
gional input-output model of the rural community, total. After verifying employment numbers in the
estimates ofcommodity exports from the rural com- county REIS table, use the procedures below to cor-
munity were obtained from the Regional Trade Re- rect employment estimates in the IMPLAN Employ-
port. These reports were analyzed to determine the mentTable againstthe REIS employment estimates.
currentexport structure, and howthat structure has Produce the MID.107 reports, aggregate the local
changedthroughtime. The final stepwas to compare economy's employment into a one-digit SIC scheme,
import markets in the urban core with commodity usingthe REIS-90 aggregation template provided by
supply potential in the rural community for possible IMPLAN to develop the MID.404 report. Compare
trade enhancement. employmentinthe aggregatedIMPLAN sectors from
the MID.404 report with the one-digit REIS employ-
Building an Accurate IMPLAN Model ment figures.
Topreparefor"groundtruthing"inthelocalcommu-
Bythetimethisstudyended,wehadlearnedagreat nity,employmentintheREISone-digitsectorsshould
deal aboutbuildinganaccurate IMPLANmodel, con- match employment in the aggregated IMPLAN sec-
ducting appropriate analyses, and where this infor- tors. Ifthe employment figures do notmatch, change
mation may fit in the rural community development IMPLAN employment figures to be consistent with
process.BeforeanyattemptismadetouseIMPLANto REIS figures. Additionally, eachIMPLAN sectorin a
identify development opportunities for a community, given aggregation should, when added across the
the IMPLAN model used must accurately reflect the aggregation, equal REIS total employment. The list-
local economy. Economically small rural regions are ingbelowidentifiesthe crosswalkbetweenREIS sec-
difficult to model because of the problem of undis- tors and IMPLAN sectors.
closed data in national data collection systems.
REIS sector IMPLAN sector
RegionalEconomicInformationSystemModi- name number
fication of IMPLAN Database—The first step in Farm 1-23
usingREISdatatocorrecttheIMPLANdatabaseisto
Agriculture, forestry,
construct atable basedonRIES county-levelemploy-
and fisheries services 24-27
ment estimates for the same year as the IMPLAN
database. We referto this table as the REIS Employ- Mining 28-47
Construction 48-57
mentTable. Itshowsthenumberofjobsineachsector
Manufacturing 58-432
ofthe economy.
Transportation and
Then, construct a table ofIMPLAN-based employ-
ment estimates aggregated to correspond to the one- public utilities 433-446
Wholesale trade 447
digitREISscheme—theIMPLANEmploymentTable.
Retail trade 448-455
The second table shows the number ofjobs in each
Finance, insurance,
sector accordingto IMPLAN. The twotables mustbe
and real estate 456-462
reconciled. Iftherearedeletions(undiscloseddata)in
Services 463-509, 525-527
several sectors ofthe REIS Employment Table, sub- —
Federal government military 519
tract all undeleted sectors from total employment to —
Federal government civilian 513-515, 520
find the employment representative of the deleted
State and local government 510-512, 522-523
sectors. For example, if a region has a single large
mine,employmentintheminingsectorwillbedeleted. Use the REIS EmploymentTable andthe MID.404
Usually, a phone call to the Forest Service District report to correct the MID.107 report for presentation
Ranger, U.S. Department ofAgriculture, County Co- to knowledgeable community members. We used the
operativeExtensionService,ordistrictDepartmentof ratio of REIS employment to aggregated IMPLAN
Labor will give a good approximation ofemployment sectors'employment(fromMID.404)toadjustemploy-
in the main industry. ment estimates in the MID.107 report. Every sector
5
within the REIS aggregation scheme ofthe MID.107 medical practitioners. Throughout the community
reportismultipUedbythisratioresultingincomplete interviews for each sector, the interviewer(s) must
conformity of the MID.107 report to REIS one-digit alwaysbeaware,andmaketheintervieweesaware,of
sector employment, and total employment. The for- this comprehensive definition ofemplo3Tnent within
mula for spreadsheetuse is: each sector.
Severalsectorsinsmalleconomiesmaynotbeaccu-
ARgEgrIeSgaStecetIorMEPmLpAlNoySmeectnotr XIMPLANSectorEmployment(MID.107) rately representedby IMPLAN. These sectors are:
Employment(MID.404) IMPLAN sector IMPLAN sector
number name
Forexample, supposeIMPLAN Sector31 (GoldOres)
502 Othernonprofit organizations
estimated gold mining employment at 100 jobs; the 503 Business associations
REIS total employment in mining was 150jobs, and 504 Labor and civic associations
IMPLAN's total (aggregated) employment in mining 505 Religious organizations
was200jobs.ThentheIMPLANSector31(GoldOres)
total of100jobs would be corrected to 75jobs (=(150/ Becauseofthenatureofsmallcommunities andtheir
200)100 asintheaboveequationtobeconsistentwith economies,thesesectorsdoexist,butareoftenstaffed
)
the REIS estimate. with volunteer labor. These sectors should be left in
When presenting the corrected MID.107 report to theMID.107report,butcloselyscrutinizedbycommu-
informed community members during the "ground nity members; the estimated psdd employment often
truthing," any sector that shows zero employment will have to be adjusted dovmward or eliminated.
should be deleted. IMPLAN sectors inwhich employ- IMPLAN Sector 505, religious organizations, can
ment will always be zero include: 461, 516, 517, 518, be inaccurate in small communities. For instance,
521, 524, and 528. Deletion ofthese sectors as well as IMPLANemploymentestimateswerefoundtobeover-
any other sectors with zero employment will avoid statedincommunitiesvdthlargeMormon(Church of
information"overload,"andenableaneasierandsim- Jesus Christ of Latter-Day Saints) populations, be-
pler portrayal ofthe local economy. cause the church relies on lay preachers. Sector 505
has exhibitedotherproblemsinthe 1990 data, which
"Ground Truthing" the Corrected IMPLAN
— do not appeartobe completely predictable, so special
Model Three documents are required to conduct scrutinyiswarrantedbytheresearcherandinformed
ground truthing: (1) the corrected MID.107 Employ-
citizens.
ment Table, (2) the IMPLAN 1990/1985 Database Twosectorsoftenunderstatedornotrepresentedby
Documentation, and(3)the 1987 StandardIndustrial IMPLANinsmallruraleconomiesare: 499(childday
Classification Manual (0MB 1987). care) and 466 (beauty andbarber shops). Pay special
Verifying the corrected MID.107 IMPLAN report
attention to these sectors, because they are both im-
throughanon-sitevisittothelocalcommunity(ground portant sources ofemployment.
truthing) is the most crucial step in correction ofthe Sectors 491 (nursing and protective care) and 492
dataofthe IMPLAN modelforthelocaleconomy. Use (hospitals) warrant special treatment in many small
localindividualsorcitizengroupstoconductaline-by- communities. Veryoften medical facilities are ovmed
line (sector by sector) assessment of the corrected and operated by county or municipal governments.
MID.107 report estimated employment. Use the IMPLAN places the wages and salaries ofemployees
IMPLAN Database Documentation manual and the
from these establishments under Sector 523 (State
1987StandardIndustrialClassificationManual(0MB £uid local government—noneducation). While this is
1987) to stimulate discussion and review of the correct from an accounting standpoint, it is often
IMPLAN employment profile ofthe local economy. conftisingtolocal citizens wantingto knowwhytheir
Local informed citizens will have a good sense of hospital is not represented in the employment data.
employment in nearly any sector in the MID.107 We concludedthat the importance ofthese establish-
report,buttheywillbeinclinedtounderstateemploy- ments can be more accurately reflected by moving
ment.Remindthemthatallpeopleworkinginasector, thejobs, all components ofvalue added, andindustry
including office staff, janitors, and other employees output, out of Sector 523 and inserting them into
perhaps notexplicitly involvedin the main activityof Sector 491 nursing and protective care and/or Sector
theindustry arealsoincludedinemploymentfigures. 492 hospitals. Talk directly vnth hospital or nursing
In addition, the employment estimates include full- homeadministratorstoobtainamoreprecisenotionof
time and part-timejobs. For example, the doctor and their relative importance. A similar problem occurs
dentist industry IMPLAN Sector (490) may include with Sectors 495 elementary and secondary schools
nurses,receptionists,bookkeepers,hygienists,labtech- and496collegesanduniversities.Thesesectorsrepre-
nicians, andjanitors. Thus, onlyone doctorordentist sent private schools only and should not be confused
can offer significant employment to other associated
vdth public schools.
6
