william b. beyers department of geography university of washington dr. ta-win lin
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Structural Change in the Induced Effects Model of the Washington State Economy: Evidence from Seven Input-Output Models. William B. Beyers Department of Geography University of Washington Dr. Ta-Win Lin Office of Financial Management State of Washington. I.Introduction - PowerPoint PPT PresentationTRANSCRIPT
Structural Change in the Induced Effects Model of the Washington State Economy: Evidence from
Seven Input-Output Models
William B. Beyers Department of GeographyUniversity of Washington
Dr. Ta-Win Lin Office of Financial Management
State of Washington
Outline of PaperI. IntroductionII. Background LiteratureIII. Data Base – History of the Washington Models &
Standardization ProceduresIV. Results
A. Change in OutputB. Change in Interindustry Structure, in the induced
effects linkage system, and output distribution due to final demand
C. Change in Employment RequirementsD. Changing Components of Final Demand
V. Concluding Comments
Background
• Leontief and Carter’s pioneering research
• Early national tests
• Early regional tests– The presumption of instability– Early data from Washington State– Early data from other region– Challenges—getting data into a consistent
sectoring scheme with constant prices
History of the Washington I/O models
• Models benchmarked against 1963, 1967, 1972, 1982, 1987, 1997, and 2002
• Each of these are Economic Census years• Sectoring scheme has changed not only due
to changes in SIC and NAICS, but also due to changes in the importance of industries in the state economy, especially the changing relative importance of goods versus services production
Standardizing Prices• The models were first converted to a common
sectoring scheme• Price indices were developed from BLS national
producer price series, and were applied to sales distributions of sectors
• Excluded from this are estimates for value added and imports, but we will make these estimates soon
• The roughly 50 sectors in each of the models were found to be comparable at the level of 25 sectors.
Industry SIC1987 NAICS20021. Agriculture 01 & 02 111, 1122. Fishing & Foresty 08 & 09 113 (Incl. state forests, etc.), 1143. Mining 10-14 214. Food Products 20 311, 3125. Textiles & Apparel 22-23 313, 314, 3156. Lumber & Wood Products 24 3217. Pulp & Paper products 26 3228. Printing & publishing 27 323, 51119. Chemicals 28 32510. Petroleum 29 32411. Stone, clay & glass 32 32712. Primary metals 33 33113. Fabricated Metals 34 33214. Industrial, Electrical & Instruments 35 & 36 & 38 333, 334, 335, 339115. Aerospace 372, 376 336416. Ship & Boat Building 373 3366 (Incl. federal/PSNS)17. Other Transport eq. 371, 374, 375, 379 3361, 3362, 3363, 3365, 336918. Other Mfg (incl. Furniture) 25, 30, 31, 39 316, 326, 337, 339919. Construction 15-17 236-23820. Transportation services 40-47 (inc. Post Office, etc. public ports ???)481, 482, 483 (Incl. Ferry), 484, 485, 486, 487, 488, 491, 492 (Incl. transit), 49321. Utilities 49 (incl public utilities) 2211 (Incl. public, BPA, etc.), 2212 (Incl. public), 2213 (Incl. public)22. Communications 48 51723. Trade 50 - 59 423-425, 44-45, 72224. FIRE 60 - 67 521, 522, 523, 524, 525, 5325. Services 70 - 89 115, 51 (excl. 5111, 517), 54, 55, 56, 61, 62, 71, 721, 81
8a. Printing 275, 276, 278, 279 3238b. Publishing 271-274, 277 5111
25a. Business Services 73, 81, 87, 89 5112, 518, 54, 55, 25b. Health Services 80 6225c. Other Services 07, 097, 70, 72, 75-79, 82-84, 86, 88 115, 512, 515, 516, 518, 519; 56, 61, 71, 721, 81
Industrial machinery and equipment 35 333Electrical machinery 36 334Instruments 38 335
3391
Sectoring Scheme
Deflator SeriesSector Name
I-O Sectors 1963 1967 1972 1982 1987 1997 2002
Agriculture IO-C-01 0.714 0.758 1.000 1.868 1.736 2.073 1.682 Fishing & Forestry IO-C-02 0.558 0.662 1.000 1.480 2.176 3.502 3.098 Mining IO-C-03 0.868 0.905 1.000 2.807 3.056 3.605 3.796 Food Products IO-C-04 0.769 0.827 1.000 2.043 2.188 2.725 2.798 Textiles & Apparel IO-C-05 0.822 0.862 1.000 1.761 1.895 2.206 2.188 Lumber & Wood Products IO-C-06 0.659 0.722 1.000 2.013 2.240 3.337 3.280 Pulp & Paper products IO-C-07 0.839 0.885 1.000 2.402 2.745 3.471 3.713 Printing and Publishing IO-C-08 0.717 0.807 1.000 2.235 2.902 4.280 4.508 Chemicals IO-C-09 0.938 0.959 1.000 2.641 2.919 4.109 4.235 Petroleum IO-C-10 0.884 0.924 1.000 6.263 4.036 4.899 5.711 Stone, clay & glass IO-C-11 0.765 0.786 1.000 2.431 2.663 3.254 3.481 Primary metals IO-C-12 0.728 0.793 1.000 2.518 2.613 3.229 3.033 Fabricated Metals IO-C-13 0.738 0.805 1.000 2.394 2.541 3.140 3.350 Industrial, Electrical & Instruments IO-C-14 0.791 0.852 1.000 2.087 2.550 2.447 2.603 Aerospace IO-C-15 0.744 0.813 1.000 2.501 2.689 3.300 3.600 Ship & Boat Building IO-C-16 0.745 0.786 1.000 2.345 2.795 3.680 4.072 Other Transport eq. IO-C-17 0.804 0.831 1.000 2.226 2.466 2.934 2.884 Other Mfg IO-C-18 0.807 0.854 1.000 2.237 2.620 3.368 3.984 Construction IO-C-19 0.645 0.726 1.000 2.384 2.730 3.692 4.475 Transportation services IO-C-20 0.738 0.777 1.000 2.224 2.276 2.883 2.972 Utilities IO-C-21 0.830 0.824 1.000 4.336 4.192 5.074 5.507 Communications IO-C-22 0.822 0.870 1.000 1.496 1.925 2.307 2.016 Trade IO-C-23 0.724 0.807 1.000 2.036 2.178 2.786 2.660 FIRE IO-C-24 0.693 0.774 1.000 2.015 2.561 3.701 4.090 Services IO-C-25 0.657 0.770 1.000 2.297 3.011 4.499 5.012 Earnings 0.7839 0.8177 1 2.42 2.7805 3.7283 3.8343
IV. Analyses of Change
A. Change in OutputB. Change in Interindustry Structure, in
the induced effects linkage system, and output distribution due to final demand
C. Change in Employment RequirementsD. Changing Components of Final Demand
Trends in Output In Broad Sectors 1963-2002
$0
$5,000
$10,000
$15,000
$20,000
$25,000
1963 1967 1972 1982 1987 1997 2002
Ou
tpu
t ($
1972
in
mil
lio
ns)
NaturalResources
Food Products
ForestProducts
Aerospace
OtherManufacturing
Construction
Transport,Communications & UtilitiesTrade
FIRE
Services
Shares of Output By Broad Sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Services
FIRE
Trade
Transport, Communications& Utilities
Construction
Other Manufacturing
Aerospace
Forest Products
Food Products
Natural Resources
Change in Interindustry Structure and Output Distribution due to Final Demand
% Intermediate in Washington State
21%
22%
23%
24%
25%
26%
27%
1963 1967 1972 1982 1987 1997 2002
Sh
are
of
To
tal
Pu
rch
ases
% Intermediate Constant$
% Intermediate Nominal$
Share of Intermediate Sales by Broad Sector
0%
20%
40%
60%
80%
100%
1963 1967 1972 1982 1987 1997 2002
Sh
are
of
Inte
rmed
iate
Sal
es
Services
F.I.R.E.
Trade
Transportation,Communications, Utilities
Construction
Other Mfg.
Aerospace
Forest Products
Food Products
Natural Resources
Elements of the Induced Matrix$ from 2002 model
0Earnings $127.3 billion32% of total purchases
InterindustryTransactions
$95.1 billion24% of total purchases
P.C.E
$102.9Billion
67% of Totalearnings
Shares of Intermediate and Personal Consumption Expenditures
4066
5014
5907
9276
13398
20578
25863
5031
6425
7107
9701
13251
20697
28446
0% 20% 40% 60% 80% 100%
1963
1967
1972
1982
1987
1997
2002
Intermediate
PCE
$1972 Billions
Composition of Inputs
Sectoral Composition of Purchases
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Other Value Added & Imports
Earnings
Intermediate
PCE / Earnings Ratios
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1963 1967 1972 1982 1987 1997 2002
Sh
are
of
Den
om
inat
or
PCE/Total Earnings
Industrial Earnings/TotalEarnings
Industrial Earnings/TotalPurchases
Mix of Overall PCE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Imports to WA P.C.E.
Value Added P.C.E.
Washington P.C.E.
Composition of Personal Consumption Expenditures –Share of total declined from 24% in in 1963 to 11% in 2002
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Services
FIRE
Trade
Communications
Utilities
Transportation services
Construction
Other Mfg
Other Transport eq.
Ship & Boat Building
Aerospace
Industrial, Electrical & Instruments
Fabricated Metals
Primary metals
Stone, clay & glass
Petroleum
Chemicals
Printing & publishing
Pulp & Paper products
Lumber & Wood Products
Textiles & Apparel
Food Products
Mining
Fishing & Foresty
Agriculture
PCE except Services, Trade, FIRE, and Communications
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Utilities
Transportation services
Construction
Other Mfg
Other Transport eq.
Ship & Boat Building
Aerospace
Industrial, Electrical & Instruments
Fabricated Metals
Primary metals
Stone, clay & glass
Petroleum
Chemicals
Printing & publishing
Pulp & Paper products
Lumber & Wood Products
Textiles & Apparel
Food Products
Mining
Fishing & Foresty
Agriculture
Induced Effects Output Multipliers
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
1963 1967 1972 1982 1987 1997 2002
(1) Direct & Indirect Avg.Multiplier
(2) Direct, Indirect, &Induced Average Multiplier
Ratio (2/1)
Correlations Induced Output Multipliers
1963 1967 1972 1982 1987 1997 1967 .916 1972 .799 .763 1982 .648 .688 .777 1987 .641 .606 .851 .856 1997 .646 .634 .706 .829 .890 2002 .569 .568 .610 .640 .766 .800
N=26 for each pair of correlationsAll are significant at the .01 levelCorrelations weaken with time
Scattergram of 1963 & 2002 Type II Output Multipliers
MULT02
2.62.42.22.01.81.61.41.2
MU
LT6
32.4
2.2
2.0
1.8
1.6
1.4
R2 = .57
Earnings Ratios Induced Effects Models
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
1963 1967 1972 1982 1987 1997 2002
0.0
0.5
1.0
1.5
2.0
2.5
Average Direct EarningsCoefficient (Left Scale)
Average Total Earnings/$Final Demand (Left Scale)
Ratio Total/DirectEarnings (Right Scale)
Correlations of Induced Earnings Multipliers
1963 1967 1972 1982 1987 1997 1967 .856 1972 .780 .699 1982 .614 .714 .766 1987 .749 .692 .877 .848 1997 .729 .737 .730 .825 .916 2002 .698 .697 ,750 .797 .886 .922
N = 26 for each pair of correlationsAll are significant at the .01 levelAs with Output Multipliers, values weaken with time
Output with constant 2002 Final demand
0% 20% 40% 60% 80% 100%
1963 - $107.0
1967 - $100.3
1972 - $100.3
1982 - $102.8
1987 - $110.6
1997 - $109.7
2002 - $107.0
Natural Resources
Food Products
Forest Products
Aerospace
Other Mfg.
Construction
Transportation Services
Utilities
Communications
Trade
FIRE
Services
Change in Employment Requirements
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Ag
ricu
ltu
re
Fis
hin
g &
Min
ing
Fo
od
Pro
du
cts
Tex
tile
s &
Lu
mb
er &
Wo
od
Pu
lp &
Pap
er
Pri
nti
ng
&
Ch
emic
als
Pet
role
um
Sto
ne,
cla
y &
Pri
mar
y m
etal
s
Fab
rica
ted
Ind
ust
rial
,
Aer
osp
ace
Sh
ip &
Bo
at
Oth
er T
ran
spo
rt
Oth
er M
fg
Co
nst
ruct
ion
Tra
nsp
ort
atio
n
Uti
litie
s
Co
mm
un
icat
ion
s
Tra
de
FIR
E
Ser
vice
s
Em
plo
ym
en
t p
er
$m
illio
n 1
97
2$
Yr 1967
Yr 2002
Jobs Required to Meet 2002 Final Demands and Output Per Job
0
1000000
2000000
3000000
4000000
5000000
6000000
1963 1967 1972 1982 1987 1997 2002
Job
s B
ased
on
Pro
du
ctiv
ity
by
Yea
r
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Co
nsa
nt
$197
2
Employment
Output per Job
Employment Related To 2002 Final Demand
0
1000000
2000000
3000000
4000000
5000000
6000000
1963 1967 1972 1982 1987 1997 2002
Job
s R
equ
ired
to
Su
pp
ort
200
2 F
inal
Dem
and
Natural Resources
Food Products
Forest Products
Aerospace
Other Mfg.
Construction
Transport Services
Utilties
Communications
Trade
FIRE
Services
Share of Output Among Major Categories of Demand
0% 20% 40% 60% 80% 100%
1963
1967
1972
1982
1987
1997
2002
Share of Output ($1972)
Intermediate
PCE
Investment
S&L
Federal
ExUS
ExFor
Tables 6 and 7- Sales in Constant $, and Percentages in this figure
Share of Regional Final Demand
0% 20% 40% 60% 80% 100%
1963
1967
1972
1982
1987
1997
2002
Share of Regional Final Demand
PCE
Investment
S&L
Composition of Regional Final Demand by Aggregate Sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Services
F.I.R.E.
Trade
Transportation,Communications, Utilities
Construction
Other Mfg.
Aerospace
Forest Products
Food Products
Natural Resources
Share of Export Base
0% 20% 40% 60% 80% 100%
1963
1967
1972
1982
1987
1997
2002
Share of Export Base ($1972)
Federal
ExUS
ExFor
Sectoral Composition of Exports
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1963 1967 1972 1982 1987 1997 2002
Services
F.I.R.E.
Trade
Transportation,Communications, Utilities
Construction
Other Mfg.
Aerospace
Forest Products
Food Products
Natural Resources
Conclusions and Future Analysis (1)
• This paper provides an unparalleled view of structural change in a region of the U.S. economy
• The data reported here may be quite different in other states
• Output has had a major realignment since the 1963 Washington Input-Output Model, labor productivity has shown major changes, and the level of exports has risen, particularly to foreign countries
Conclusions and Future Analysis (2)• We need to extend the analysis of non-
earnings components of value added• We also need to include estimates of changing
imports• We look forward to comments on this paper.• We realize that there are major statistical
issues associated with the analyses reported here, but we believe that this paper provides a sound perspective on structural change in a growing regional economy in the United States