Reference
Definitions for the terms used in a Lumecon analysis.
The terms that come up most in economic impact analysis, defined in plain language. For the mathematics behind them, read the methodology.
- Economic impact analysis
- A method for estimating the economic activity associated with an organization, project, program or change within a defined region and period. An impact analysis is not, by itself, proof that the activity caused an observed outcome.
- Direct effect
- The activity of the project itself: its own spending, wages and jobs.
- Indirect effect
- The activity at the suppliers a project buys from: the vendors, contractors and businesses in its supply chain.
- Induced effect
- The activity created when workers from the direct and indirect activity spend their wages locally: groceries, rent, healthcare and the rest of household spending.
- Total impact
- For a given measure, the direct, indirect and induced effects added together. Jobs, labor income, GDP contribution and economic output each have their own total.
- Multiplier
- A ratio relating a direct effect to a total or additional effect for a particular measure, such as economic output, labor income or employment. Multipliers vary by industry and geography.
- Regional purchase coefficientRPC
- The share of a good or service a region actually buys locally rather than importing. RPCs estimate how much of each dollar stays in-region versus leaking out to suppliers elsewhere.
- Input-output modelI-O
- The economic framework behind impact analysis: a matrix of how industries buy from and sell to one another, used to trace how spending flows through an economy. Lumecon builds its model from national economic accounts and regionalizes those relationships to the geography being analyzed.
- NAICS sectorNAICS
- The North American Industry Classification System, the federal standard for grouping economic activity by industry. Lumecon classifies at the two-digit sector level, where public data are generally more available.
- Base year
- The reference year to which the analysis data’s price levels and industry structure are anchored.
- Labor income
- Employee compensation and, where modeled, proprietor income associated with the activity. It is reported alongside jobs, GDP contribution and economic output.
- Economic output
- The total value of production the activity supports: value added plus intermediate purchases.
- Jobs supported
- The employment associated with the modeled activity across the direct, indirect and induced layers. Depending on the model and analysis period, it may represent annual jobs, average annual employment or job-years; the analysis should state the basis.
- GDP contribution
- The value added by the analyzed activity: the measure that corresponds to a region’s contribution to GDP. Lumecon uses GDP contribution as the plain-language label for value added.
- Tax impacts
- Estimated federal, state and local tax revenue associated with the modeled activity. Tax impacts are not the same as fiscal impact, which also considers government costs.
No term matches that. Ask Cedar in the corner of this page, or write to contact@lumecon.ai and we will add it.
For the calculations behind these terms, read the methodology. Cedar can also explain a term in the context of an analysis.
