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IMPLAN Blog

What is IMPLAN?

August 13, 2018 by Tim French

So, you’re hoping to gain insight and quantify the impact of an industry, a new or existing business, expected growth or changes, or a specific event to the economy of a particular region. Where do you even begin?

IMPLAN is a platform that combines a set of extensive databases, economic factors, multipliers, and demographic statistics with a highly refined modeling system that is fully customizable. Together, our software and robust data can help you gain insight into an industry's contributions to a region, quantify the impact of a shock to an economy, examine the effects of a new or existing business, model the impacts of expected growth or changes, or study any other event specific to the economy of a particular region and how it will be impacted.

Examples of frequent IMPLAN users include:

WhitePaperCover_HowToReportThe analysis is only one part of the whole story. To learn more about other presentation and storytelling techniques and the must-have sections to include in a report, check out our white paper “Creating a Compelling Economic Impact Report.”

Together, our software and data give you a window into your region of study — like one gigantic transaction log for the local economy. This log shows all purchases within a local economy, who made those purchases, as well as where and when. This means that you can not only explore the economy of your choosing, but also model the impact of the spending of any industry and see the ripple effects throughout that economy. The software/data window combines a set of extensive databases including economic factors, multipliers, and demographic statistics with a highly refined and detailed modeling system that’s fully customizable. IMPLAN allows the user to develop local-level input-output models that can estimate the economic impact of changes to an economy.

What the Model Shows You

The model identifies direct impacts by sector, then develops a set of indirect and induced impacts by sector.

Direct Effects

Icon_DirectDirect effects are the immediate result of the direct spend. Applying these initial changes/dollars spent to the multipliers in an IMPLAN model will then display how the region will respond, economically to these purchases.

Indirect Effects

Icon_IndirectIndirect impacts stem from local industries’ purchases of inputs (goods and services) from other local industries. These purchases are also known as intermediate expenditures.

For example, if the direct impact is the construction of a building, the first round of indirect effects will include a purchase of ready-mix concrete. This purchase of ready-mix concrete spurs the ready-mix concrete manufacturing industry to in turn purchase more sand and gravel. This purchase of sand and gravel is part of the second round of indirect effects. This cycle of spending continues to work its way backward through the supply chain, with each round of impacts getting smaller and smaller, until all money leaks from the local economy by way of imports, taxes, and profits, which do not generate additional impacts locally.

IMPLAN does not assume that all input purchases are made from local businesses; the proportion of local vs. non-local purchases varies by commodity and is built into the IMPLAN system.

Induced Effects

Icon_InducedNote that IMPLAN models account for commuting patterns; thus, induced impacts will only reflect the spending of wages from residents. IMPLAN removes payroll taxes, personal taxes, and savings before allowing the remainder to be spent on goods and services. IMPLAN also accounts for imports and does not assume that all purchases of goods and services are made within the study area.

Cascade of direct, indirect, and induced impacts

How to use it

For a basic analysis, you only need the industry or institution in which the change is occurring, the year of the change, and one of the following: industry sales, employment, employee compensation, or proprietor income.

With this information, and the power of the local economic data provided by IMPLAN, we can estimate the rest of the information needed for your impact.

  • Select the geography you want to assess.
  • Select the industries relevant to your organization that you would like to evaluate.
  • Input your activity (employment change, industry sales change, industry spending change, etc.).
  • Review and report the total economic impact (Direct, Indirect, and Induced) of your organization and each of its segments.


Basic calculation process

Put it into Practice

IMPLAN users are very often the most clever at finding unique ways to apply the data and analysis to everything from everyday operational decision making to crafting and evaluating public policy as high as the federal level. Here are just a few of the best examples of putting impact and contribution analyses into practice:

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20161205_NP_CaseStudyCover_impactanalysis-819930-edited 20180426_CaseStudyCover_MuscodaProteinProducts-262688-edited 20170427_CN_CaseStudyCover_NMTC

Wrapping it up

I-O offers one of the best ways to translate available economic data into insights into industry and household spending patterns and many other types of impact results. Analysts of every kind have relied on the insights delivered by IMPLAN’s data and software for the better part of the last half century to make smarter and faster business decisions, set legislative priorities, evaluate the strength of a supply chain, among many, many other uses. Chances are that if your project or business has a financial component, then IMPLAN can reveal some sometimes surprising detail about how your project relates to the local, state, or national economy. The extent of what you can model is limited only by your imagination.

An overview to communicating the technical and creative elements of your economic impact study clearly and persuasively.

Topics: Data, Economics, Methodology

Why IMPLAN?

Put simply, IMPLAN is built for everyone.

With IMPLAN there are no black boxes. All of the background data used to create your personalized input-output models can be viewed and customized to reflect your Study Area. So now, what used to take economists weeks can be done in minutes. By anyone!

Reasons why IMPLAN is the best choice:

  • Easy to learn
  • Easy to use
  • Outstanding customer support
  • Instills confidence in your analyses

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