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Economics & Social Sciences Research Program

Untangling Economic Impacts for Alaska Fisheries: A Structural Path Analysis

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Fishery managers are often provided with economic impact multipliers calculated based on input-output (IO) or social accounting matrix (SAM) models.  Most often, however, the economic impact multipliers for fisheries measure only the total economic impacts, and do not provide information on how and through what channels the fishery management actions or exogenous shocks generate the impacts.

A structural path analysis (SPA) is a useful tool that has been used to unravel the aggregate multipliers in economic impact analysis.  The tool is used to investigate the channels through which the initial policy shocks or exogenous shocks to a sector (origin) are transmitted to and generate effects on other sectors (destination sectors) of an economy.  This type of analysis examines the concentration, strength, and speed of various transmission channels or paths.  First, concentration refers to the share of total economic impact of a shock that travels through one or more paths that link different economic sectors (or accounts) in a SAM.  Second, strength is measured by the size of the contribution of a path to the total multiplier effect.  Finally, speed relates to the share of the contribution of the path that travels directly from the origin to the destination sectors without going through any sector (account) more than once.  The transmission of effects along paths of higher lengths will typically take more time to materialize because a larger number of transactions need to take place.

None of the previous studies have utilized this tool for analysis of economic impacts of fisheries.  This study uses an SPA to show how the initial shocks to the fishery sector generate the impacts through various channels in a regional economy and to what extent these impacts are amplified while passing through the various channels.  The SPA analysis is conducted within a SAM framework for the fisheries of Southeast Alaska, as an example.  Recently, an industry-by-industry SAM for Southeast Alaska has been generated.  Preliminary results from the analysis are being examined.  Once completed, this study will provide the fishery managers a better understanding of how the regional economic impacts are generated and serve as a useful tool that is complementary to the traditional economic impacts analysis which calculated only the aggregate economic multipliers.

By Chang Seung


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