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Chicago Executive Airport Economic Impact Study–2007 Page 1-7
Multipliers trace money flows through a regional economy. The longer money circulates in the
region, the better-off the region is and the higher the multiplier. The multiplier exemplifies, through
supplier expenditures and the respending of earnings, that many people and businesses benefit,
even those who do not use or directly serve the airports.
For example, if an airline employee earns $100 at the airport, and uses it to buy $100 worth of
groceries, he is better off by $100 because he has $100 worth of groceries, and the local grocer is
better off because he has the $100. The grocer then pays his employees, the delivery truck
operator, etc. all of whom then are slightly better off due to the airport. The multiplier traces this
flow of funds until the money ultimately leaks to places outside the impact area, or reaches the
source of its raw material. Therefore, the larger and more developed the impact area, the longer
the money remains in the regional economy, resulting in a higher average multiplier.
Secondary Multiplier Model – To estimate the multipliers, The Minnesota Implan Group’s Regional
Input-Output Modeling System (IMPLAN) is used. Final demand expenditures (i.e., primary direct
and indirect impact values) are categorized into industrial codes and applied to a variety of
different multiplier classifications, depending on the nature of the final demand activities. The size
of the multipliers varies depending on the study area’s size (population) and economic base.
Typically, the larger and more developed the impact area, the longer the money re-circulates in
the regional economy, resulting in a higher multiplier. For this study, multipliers for the Illinois
Counties of Cook and Lake are used.
Three Measures of "Economic Impact" – The IMPLAN model provides three measures of the
total economic impact attributable to the airports: Economic Activity (Output), Earnings (Payroll),
and Jobs. The total impacts include the aviation sector itself (i.e. the "direct and indirect
impacts"), as well as the "multiplier effect" of the aviation sector. The impacts are estimated for
the Year 2007. All three indicators of economic impact are useful, however the monetary
measures should not be added together, as explained below:
• Economic Activity – The value of the aviation primary expenditures (aviation or airport
service), plus the secondary multiplier effect (the sum of all of the intermediate goods and
services needed to provide aviation services, plus the induced impacts of increased
household consumption). Total economic activity equals the sum of intermediate demand,
consumption demand, government demand, investment demand, and net export demand.
Because Economic Activity includes intermediate demand it should not be compared to
Gross State Product.
• Earnings – The primary and secondary wages and salaries, other labor income and
proprietors’ income paid to all employed persons that deliver final demand output and
services. Earnings Impacts are part of Economic Activity, so they should not be added to
the Economic Activity impact.
• Jobs – The number of employees who provide aviation service or manufacture aircraft,
plus the aviation-oriented share of those that are employed in sectors that support the air
passenger (hotels, restaurants, etc.), plus those employed in the industries included in the
Wilbur Smith Associates November 2007