Spatial problems of estimating multiplier effects in the local scale

Abstract

Academic studies of local multiplier effects generated by industries or large en- terprises seem to be a ‘rara avis’ of contemporary research. This scarcity stems from a different research procedure implemented on a local scale. The lack of primary data necessary to conduct classical input-output analysis for the local level (Polish municipalities and counties) leads to the need of carrying out the company questionnaire. The survey usually entails the issue of identifying main contractors and spatial pattern of commuting practices. Moreover, in order to obtain the data about the place where employees pay taxes the employee survey is necessary. Spatial problems of estimating multiplier effects have been described based on empirical data in Krakow’s business service centers (Micek et al. 2010) and companies functioning in Special Economic Zone in Mielec (Domański et al. 2005). Multiplier effects are a form of impact effects and they may be presented as an increased employment in local companies or increased revenues of local government from corporate or personal income taxes. Employment multiplier effects are generated in cooperating companies (indirect effects) and firms which provide services for em- ployees of the analyzed business sector (induced effects). There are two problems that arise while estimating local multiplier effects described in the paper. The first issue is the ‘leakage effect’ measured in a number of jobs being generated outside the local area (community or county). The general rules concerning the lower leakage estimated for some industries (e.g. trade in comparison to market research services) are known, but attribut- ing the value of supplies to a particular sector is possible only after obtaining specific data from enterprises and critical assessment of their quality. The second issue is related to the low quality of official statistics in the fiscal system. Almost 90% of employees of Krakow business services centers live in the city, but about 50% of them pay taxes in their former place of residence. If the employees had paid taxes in their actual place of residence, the city would have benefited from additional 9.8 m PLN in 2009 (twice as much than it was in fact collected). On the other hand, this change would lead to the decrease of revenues of local governments outside Malopolska region that would have lost 8-10 mln PLN each year.