Regional Industrial Multiplier System (RIMS) II


[This discussion of RIMS II is based on documents prepared by the Connecticut Center for Economic Analysis, University of Connecticut, and the Bureau of Economic Analysis. See also the BEA's Overview of RIMS II]


RIMS was originally developed in the 1970s by the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce, based on the Department of Commerce's input-output table of the national economy. It breaks out almost 500 separate U.S. industries, including airports.

The Federal Aviation Administration has long used RIMS as its standard model of the economic impacts of airports.

RIMS measures the economic impact of an industry by accounting for three elements of potential economic impacts:

Direct impacts include employment, payroll, and revenue generated by services and good sold on the airport.

Indirect impacts are what users and employees of the airport spend off-airport (in the local and regional economy, e.g., in hotels and restaurants) as a result of their using or being employed at the airport.

Induced impacts include the value of goods and services purchased by money generated by direct and indirect impacts throughout the regional economy -- goods and services not associated with the airport and which would otherwise not be available.

RIMS II multipliers are intended to show the total regional effects on industrial output, personal earning, and employment for any county or group of contiguous counties in the United States resulting from any industry activity. Industry descriptions are defined according to the BEA's 1977 national input-output tables. Induced impacts for any airport-related businesses can be estimated by applying the RIMS II multipliers to activities within the air transportation industrial sector.

RIMS II multipliers are given in three tables.

Total output. These multipliers are used to compute the total impact of a change in demand. They identify the demands placed on a particular region from the future growth of a business activity.

Earnings. These multipliers identify the demands placed on a particular region from the future growth of a business activity. They measure the impacts on earnings (income) and employment.

Employment. These multipliers are used in calculating the total number of jobs created by final changes in demand.

Of the three sets of multipliers, the earnings multipliers are the most suitable for estimating the economic impacts of a particular business activity. The BEA can also supply a household direct coefficient table, which can be used to determine sales of a particular regional industry when airport expenditures are the only available information.

Each aviation business related to an airport is assigned a Standard Industrial Classification (SIC) code. The aviation-related business is identified by a corresponding RIMS II code, which identifies the multiplier factor to be applied to that business. Business activities that are most likely encountered in aviation-related economic studies are listed in the table at the end of this document.

RIMS II uses sales by aviation businesses to estimate the final demand at an airport. The magnitude of a business activity's economic consequences to the airport determine whether the activity is defined as having a direct or indirect impact. The business information gathered at an airport includes:

Magnitude of sales
Size of purchase
Identity of purchase
Number of employees
Size of payroll
In general, sales are multiplied by RIMS II multipliers to determine economic impacts. However, if data are lacking for some types of business activity, other information can be used, e.g. expenditures, payroll earnings, and number of employees.

Example 1. Earnings impact derived from sales data.

Business = fixed-based operator (from survey)
RIMS II code = 650500 (from table)
Sales = $100,000 (from survey)
RIMS II earnings multiplier for code 650500 = 0.6131

Earnings impact calculation:

$100,000 X 0.6131 = $61,310


Example 2. Earnings impact derived from payroll data.

Business = engine and propeller mfr. (from survey)
RIMS II code = 610700 (from table)
Sales (non provided in survey)
Payroll = $300,000 (from survey)
RIMS II earning multiplier (for code 610700) = 0.7120

Earnings impact calculation:

1. Direct coefficient household multiplier for RIMS code = 0.3676 (from RIMS tables)
2. Dividing RIMS II earning multiplier (0.7120) by direct coefficient household multiplier (0.3676) yields the economic base multiplier, 1.9369.
3. Multiplying payroll ($300,000) times the economic base multiplier (1.9369) yields earnings, $581, 070.


Example 3. Earnings impact derived from employment data.

Business - aerial sprayer (from survey)
RIMS II code = 010100 (from table)
Sales (none provided in survey)
Employees = 3 (estimated by airport manager)
RIMS II earnings multiplier (for code 010100) = 0.5662

Earnings impact calculation:

1. Obtain direct coefficient household multiplier for RIMS code = 0.2619 (from table)
2. Dividing RIMS II earnings multiplier (0.5662) by direct coefficient household multiplier (0.2619) yields the economic base multiplier, 2.1619.
3. Average earnings per job = $15,000 (from SIC number, RIMS II code, and county)
4. Multiplying estimated number of employees (3) times average earnings per job ($15,000) yields payroll, $45,000.
5. Multiplying payroll ($45,000) by economic base multiplier (2.1619) yields earnings, $97,286.


Airport-related businesses and
corresponding RIMS II code.


Business
RIMS II
Number

AIRPORT MANAGEMENT
Administration650500
Construction110400
AIRLINES650500
FIXED-BASE OPERATORS
Aircraft Servicing650500
Aircraft Rental720300
Aerial Spraying010100
FEDERAL FACILITIES
Air National Guard780400
Air Traffic Control650500
Airport Mail Facilities650500
Airways Facilities650500
Armed Forces780400
Customs Patrol650500
Forestry Service040000
Weather Service730300
ON-SITE AVIATION RELATED
Advertising730300
Aircraft Manufacturing600100
Aircraft Sales (retail)690200
Airport Parking750000
Airport Security650100
Airport Terminal Services650500
Auto Rental750001
Auxiliary Aircraft
Parts Manufacturing

600400
Aviation School770402
Avionics Manufacturing620100
Avionics Repair730300
Barber Shops720200
Book Stores690200
Building Maintenance
and Cleaning

730100
Coin-operated Amusement760200
Drinking Places740000
Drug Stores690200
Engine and Propeller Mfr.610700
Fire Departments790300
Flight Insurance700500
Flying Clubs770400
Flying Instruction770403
Food Services690100
Freight Forwarding650701
Gift Shops690200
Hotels/Motels720100
News Dealers690200
Personnel Supply Services730100
Police Department790300
Repair Shops730300
Restaurants740000
Taxi Service650100
Tobacco Shops650100
Travel Agents650702