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Bureau of Economic Analysis RIMS II Model John Barrett Principal Performance Economics LLC IIUSA: EB-5 Regional Center Advocacy Conf & Annual Meeting Washington, DC May 10, 2011
Bureau of Economic Analysis RIMS II Model
John BarrettPrincipal
Performance Economics LLCIIUSA: EB-5 Regional Center Advocacy Conf & Annual Meeting
Washington, DCMay 10, 2011
Performance Economics LLC
Goals of the Presentation
What is the RIMS II model? Why use RIMS II for EB-5 economic impact? How to properly use the RIMS II model to
estimate job creation for an EB-5 project. Examples of RIMS II application.
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What is RIMS II? Regional Industrial Multiplier System (RIMS) of Input-Output (I-O)
tables from the Bureau of Economic Analysis.
Based on national annual and benchmark I-O table and regional data. Latest RIMS II based on 2002 national benchmark I-O table and
2007 regional data.
Multipliers measure the economic impact of a change in final demand (spending) on output, value added, earnings and employment on a region’s economy.
Provides six types of input-output multipliers for any county or multi-county area in the United States
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Type I and Type II Multipliers
Type I multipliers Industry impacts only Total Impact = direct + indirect
Type II multipliers Industry impacts and household spending
impacts Total Impact = direct + indirect + induced More commonly used than Type I Multipliers
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RIMS II Multiplier DefinitionsMultiplier Definition
Final-demand outputTotal dollar change in output that occurs in all industries for each additional dollar of output delivered to final demand in the industry of interest
Final-demand earningsTotal dollar change in earnings of households employed by all industries for each additional dollar of output delivered to final demand in the industry of interest
Final-demand value addedTotal dollar change in value added that occurs in all industries for each additional dollar of output delivered to final demand in the industry of interest
Final-demand employmentTotal change in number of jobs that occurs in all industries for each additional 1 million dollars of output delivered to final demand in the industry of interest
Direct-effect earnings
Total dollar change in earnings of households employed by all industries for each additional dollar of earnings paid directly to households employed by the industry of interest
Direct-effect employment Total change in number of jobs in all industries for each additional job in the industry of interest
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Types of Projects RIMS II Can Model
Bringing new power plant online New infrastructure facilities, i.e. ports and airports Opening and closing of manufacturing facilities New retail establishments New stadium construction Tourism spending
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Advantages of Using RIMS II USCIS believes RIMS II “facilitates transparency”* Level of industry detail available in RIMS II Constructed with consistent set of government data,
comparable across regions RIMS II proven to be just as accurate as regional I-O
models based on costly surveys Relatively lower cost compared to other models Proven track record over three decades
*EB-5 Immigrant Investor Program Stakeholder Meeting, California Service Center, March 17, 2011
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RIMS II Project Setup
What is the project being studied? What is the geography of the study area? What is the source of the change in final
demand? How large is the change in final demand? What is the timing, how long will the project
last? Which industries are directly affected?
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RIMS II Example 1: Construction of New Office Building
Question Answer
What is the project being studied? Impact of new capital spending project. How many jobs will be created?
What is the source of change in final demand? New construction
How large is the change in final demand? $100 million construction cost.
How long will the project last? 33 months
Which Industries are affected? New Construction (NAICS 230000)
Geography of the study area? Burlington, VT MSA
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Results for Construction Using Type II Final-Demand Multipliers
$100 million x
1.7645final-demand
output multiplier =$176.5 million
total output
$100 million x
0.5070final-demand
earnings multiplier =$50.7 million
total earnings
$100 million x
16.5696final-demand
employment multiplier =1657
total jobs
$100 million x
0.9451final-demand
value-added multiplier =$176.5 milliontotal value-added
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RIMS II Example 2: Operation of New Grocery Establishment
Question Answer
What is the project being studied? Impact of new retail grocery establishment. How many jobs will be created?
What is the source of change in final demand? New retail grocery sales
How large is the change in final demand? $30 million in annual sales
How long will the project last? Ongoing
Which Industries are affected? Retail trade (NAICS4A0000)
Geography of the study area? Baltimore, MD MSA
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Split Retail Sales into Distribution Costs and Margins
NAICS Producer Value
Rail Value
Truck Value
Water Value
Air Value
Wholesale Margin
Retail Margin
Purchase Value
311000 Food
Manufacturing450,170 2,791 9,422 111 331 57,996 109,091 629,912
312110 Soft Drink
Manufacturing32,783 8 495 8 14 8,735 13,345 55,387
3122A0 Tobacco
Manufacturing47,464 - 577 - 4 15,020 11,525 74,589
Total 530,417 2,799 10,493 119 348 81,752 133,960 759,888
Percent of purchase
price0.6980 0.0037 0.0138 0.0002 0.0005 0.1076 0.1763 1.0000
Margins and Transportation Costs
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Parsing the Change in Final Demand
Producer Value
Rail Value
Truck Value
Water Value
Air Value
Wholesale Margin
Retail Margin
Purchase Value
Percent of purchase
price0.6980 0.0037 0.0138 0.0002 0.0005 0.1076 0.1763 1.0000
Change in Final Demand
(Millions of $)20.94$ 0.11$ 0.41$ 0.00$ 0.01$ 3.23$ 5.29$ 30.00$
Purchaser Price to Producer Price
Only the $5.29 million represents change in final demand for the grocery store and this is the amount that should be applied to the final demand multipliers for retail (NAICS 4A0000).
Other dollar amounts can be included in the impact assessment if there is good evidence these services/goods will be supplied locally.
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Results for Grocery Using Type II Final-Demand Multipliers
$5.29 million x
1.8751final-demand
output multiplier =$9.92 million
total output
$5.29 million x
0.5511final-demand
earnings multiplier =$2.92 million
total earnings
$5.29 million x
19.3360final-demand
employment multiplier =102
total jobs
$5.29 million x
1.1995final-demand
value-added multiplier =$6.35 milliontotal value-added
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Thank You
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