Abstract
A social accounting matrix (SAM) model for Alaska is constructed to investigate the role of the state’s seafood processing industry. The SAM model enables incorporation of the unique features of Alaska economy such as (a) the existence of a large nontraditional economic base, (b) a large leakage of labor income, and (c) a very large share of intermediate inputs imported from outside the state. The role of an industry in an economy with these features cannot be examined correctly within an input–output framework, which is the method most often used for examining the importance of an industry to a region. Taking an export base view of the economy, we found seafood processing to be an important industry, generating 4.5% of the state’s total employment. While an important driver of the state’s economy, the industry has the smallest SAM multiplier mainly due to a large leakage of labor earnings and a large share of imported intermediate inputs. We also found that nontraditional economic base components such as (a) federal transfers to state and local governments, and (b) federal transfers, permanent fund dividend (PFD) payments, and other extra-regional income received by households generate about 26% of the state’s total employment and earnings.
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Notes
IMPLAN (IMpact analysis for PLANning) is an economic modeling system and continuously updated regional database. Using IMPLAN, it is possible to construct an internally consistent set of current economic flow accounts for any region (defined as an aggregation of counties) in the U.S. See Minnesota IMPLAN Group (1999)
It is likely that seafood industry employment and earnings are underestimated in IMPLAN, particularly because state unemployment insurance programs do not cover many of the crew members and fishermen in the commercial fishing sector due to the informal or part-time nature of employment in the industry.
IO and SAM models are demand-driven models. Although relatively easy to implement, these models lack important microtheoretic foundations, assume fixed prices, and ignore substitution effects in the use of factor inputs and consumption of final products. Since these models also ignore supply side constraints, policy impacts tend to be overestimated. Computable general equilibrium (CGE) models overcome some of these limitations by allowing flexible prices to trigger substitution effects in production and consumption. However since this study employs a SAM model, it also suffers from the weaknesses mentioned above.
Sharma et al. (1999) also provide a comprehensive review of three different IO approaches and the associated studies that have been used to estimate the contribution of an industry. These three approaches are the final demand-based approach, the output-based approach, and the hypothetical extraction approach.Sharma et al. (1999) also provide a comprehensive review of three different IO approaches and the associated studies that have been used to estimate the contribution of an industry. These three approaches are the final demand-based approach, the output-based approach, and the hypothetical extraction approach.
To “close” the model with respect to households and government means that these two accounts (households and government) are placed inside the technical coefficient matrix, and are treated as endogenous variables in the model.
The most recent IMPLAN data available at the time of this study was 1998 data.
U.S. Census data do not include the average number of persons in a household in each income class. According to the U.S. Census 2000, the average household in Alaska is about 2.72 persons. Therefore to allocate the PFD to the different types of households in IMPLAN we assumed that all nine income classes have the same average number of persons per household.
In this paper the term “export-dependent” employment or earnings is that portion of employment or earnings that is dependent on exogenous demand or exogenous financial inflows or income.
Deliveries of processed seafood (e.g., headed and gutted) made by nonresident-owned catcher-processors to Alaska processors for secondary processing are counted by IMPLAN as imports from the seafood processing sector. Nonresident-owned catcher-processors may also make deliveries of raw fish to at-sea processors that are owned by Alaska residents, or to shoreside processors located in Alaska.
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Seung, C.K., Waters, E.C. The role of the Alaska seafood industry: a social accounting matrix (SAM) model approach to economic base analysis. Ann Reg Sci 40, 335–350 (2006). https://doi.org/10.1007/s00168-005-0048-0
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DOI: https://doi.org/10.1007/s00168-005-0048-0