Timo Tohmo

New Developments in the Use of Location Quotients to Estimate Regional Input–Output Coefficients and Multipliers

Tohmo T. (2004) New developments in the use of location quotients to estimate regional input–output coefficients and multipliers, Reg. Studies 38, 43–54. This study compares the survey-based regional input–output coefficients and production multipliers published by Statistics Finland, 2000, with estimates obtained by applying location quotients (LQs) to national data. The consequences of using alternative adjustment formulae, the ‘SLQ, CILQ and FLQ’ are illustrated by an input–output model constructed for the Keski-Pohjanmaa (K-P) region. The results indicate that the SLQ and CILQ both produce highly misleading regional input–output coefficients and multipliers. These adjustment formulae are clearly not good enough for the purposes of making local policy and regional planning. The FLQ formula (β=1) yields much better regional input–output coefficients and multipliers than the SLQ and CILQ. The FLQ gives very good estimates for regional multipliers in nearly all industries. The difference between the multipliers generated by the FLQ and the survey-based K-P regional multipliers is on average about −0·3%. The multipliers for the K-P region are typically much lower than for Finland as a whole, indicating that the economic structure of the K-P region is dependent on that of other regions. Hence there is a need to make proper allowance for interregional trade. In the case of the K-P region, the FLQ with β=1 was able to offset the tendency of the CILQ to generate excessively large regional multipliers.

Economic Impacts of Cultural Events on Local Economies: An Input—Output Analysis of the Kaustinen Folk Music Festival

This paper examines the economic impacts of Finlands Kaustinen Folk Music Festival. The impacts are calculated on output, demand and wages, employment and on national and regional taxes. The results indicate, first, that the effects of the festival on output are about ₠1.7 million. Kaustinen can also be seen as a good investment for the local municipality, as regional tax revenues increased by about ₠65,600 in the year studied, while the annual subsidy was ₠40,365. From the perspective of the Keski-Pohjanmaa region as a whole, the Kaustinen Folk Music Festival has a substantial impact on regional incomes through subsidies (about one-fifth of the costs of the festival is offset by subsidies from the Arts Council of Finland (Ilmonen et al, 1995) and the direct and indirect effects of consumption by festival visitors in different economic sectors. The impact on employment in the region is low (27 employees). The mobilization of voluntary labour, not measured in this study, is, however, considerable. Although the input–output method is laborious and statistically complex, it is very suitable for measuring the impact of tourism or cultural events on local economies. The method provides results that can be used in framing regional policy.

A Comment on Tobias Kronenberg’s “Construction of Regional Input-Output Tables Using Nonsurvey Methods: The Role of Cross-Hauling”

This article examines the effectiveness of a new non-survey regionalization method: Kronenberg’s Cross-Hauling Adjusted Regionalization Method (CHARM). This aims to take into account the fact that regions typically both import and export most commodities. Data for Uusimaa, Finland’s largest region, are employed to carry out a detailed empirical test of CHARM. This test gives very encouraging results. CHARM is suitable for studying environmental questions, but it can only be applied in situations where foreign imports have been included in the national input–output table. Where the focus is on regional output and employment, location quotients (LQs) can be used for purposes of regionalization. On both theoretical and empirical grounds, the FLQ appears to be the most suitable LQ currently available. It should be applied to national input–output tables that exclude foreign imports. Both types of table are available at the national level for all European Union members as well as for some other countries.

Estimating Regional Input Coefficients and Multipliers: The Use of FLQ is Not a Gamble

Flegg A. T. and Tohmo T. Estimating regional input coefficients and multipliers: the use of FLQ is not a gamble, Regional Studies. This paper re-examines the Finnish evidence presented by Lehtonen and Tykkyläinen on the use of location quotients (LQs) in estimating regional input coefficients and multipliers. They argue that the choice of an LQ-based method is a gamble and that there is no single method that can be recommended for general use. It is contended here that this evidence is erroneous and that the FLQ (Fleggs location quotient) yields results far superior to those from competing formulae, so it should provide a satisfactory way of generating an initial set of input coefficients. The choice of a value for the parameter δ is also examined.

Inter-industry job mobility in the knowledge economy in Finland

Purpose - – The purpose of this paper is to investigate inter-industry labor mobility, paying special attention to workers who move into high-tech (HT) sectors or knowledge-intensive business services (KIBSs). This study inquires whether skilled workers are mobile and whether the characteristics of mobile workers support the effective transfer of knowledge across industries. Design/methodology/approach - – Census data representing 7 percent of Finnish residents were used. The micro-econometric estimation method with correction of sample selection bias was applied. Findings - – The results show that young workers are the most mobile, whereas mobility decreased for those with previous work experience, higher education and higher income level. These findings indicate that the highly skilled workers are not necessarily the most mobile, a trend that may weaken the effectiveness of knowledge spillover. However, on average, highly educated workers move into KIBS sectors more often than to other sectors, and HT sectors attract workers who have higher incomes, which may indicate that their skills are highly valued. As a result, knowledge spillovers may emerge. The knowledge spillovers resulting from job mobility are concentrated in large growth centers that have universities. Originality/value - – This study provides a new and topical viewpoint to the mobility literature by focussing on skilled workers and their movement toward the HT and KIBS sectors.

Using CHARM to adjust for cross-hauling: the case of the Province of Hubei, China

Data for the Chinese province of Hubei are used to assess the performance of Kronenbergs Cross-Hauling Adjusted Regionalization Method (CHARM), a method that takes explicit account of cross-hauling when constructing regional input–output tables. A key determinant of cross-hauling is held to be the heterogeneity of commodities, which is estimated using national data. However, contrary to the authors’ findings for Finland, CHARM does not generate reliable estimates of Hubeis sectoral exports, imports and volume of trade, although it is more successful in estimating sectoral supply multipliers. The poor simulations of regional trade are attributed to the fact that Hubei is a relatively small region, where there is a large divergence between regional and national technology and pattern of final demand. The simulation errors are decomposed into components reflecting differences between regional and national technology, final demand and heterogeneity. The third component is found to be the least important of the three sources of error.

Looking for determinants of willingness-to-pay for Sibelius Hall, Lahti

Abstract The aim of this paper is to determine the factors affecting the willingness-to-pay for a local concert hall, namely Sibelius Hall in Lahti. Our study argues that a high income, the use of cultural services and a positive attitude towards culture were connected to a high willingness-to-pay for Sibelius Hall. Our study revealed that “I do not know” answers can be partly explained by the character of cultural preferences being an acquired taste. As a consequence, the users and respondents exhibiting a positive attitude towards culture may choose the “I do not know” option instead of making a zero bid.

Entrepreneurial And Regional Growth Activity In Finland

Audretsch & Feldman (2004) argue that an agglomeration is a collection of localized firms with a common focus. As firms thrive, resources are attracted to the region. They state that, if entrepreneurship serves as a mechanism for knowledge spillovers, measures of entrepreneurial activity should be linked positively to regional growth performance. In Schumpeterian economics the engine of economic development is entrepreneurial innovation. Creative destruction makes way for new innovations and growth. In this study, we simultaneously examine the regional entrepreneurial activity and regional growth activity in Finland. A further aim of the study was to find out if entrepreneurial activity and growth activity also play a deagglomerating role. We find, first, that the indicators used are very well suited to measure the dynamic environment, especially in manufacturing, since the regions with the most dynamic environment were areas with high small-business activity. Furthermore, the study indicates that growth activity should be taken into account when examining regional development by means of the concept of the dynamic environment. Secondly, we find that entrepreneurial activity and growth activity decreases regional specialization, i.e., the regions with the highest regional specialization are characterized by the lowest levels of entrepreneurial activity and growth activity. Our study confirms with Finnish data the findings of Dumais et al. (2002) that new plant births play a deagglomerating role. The results of the study indicate also that growth activity tends to act to reduce regional specialization. As a whole, the results suggest that the regional specialization is the result of a dynamic process in which the combination of plant births and growth act together.

The economic impact of tourism in Central Finland: a regional input–output study

The purpose of this study is to examine the total economic impact of tourism at the regional level in Central Finland. This paper aims to clarify the extent to which tourism contributes to regional output, employment, income and taxes in tourism-related sectors.,This study is based on a regional input–output analysis. The author calculates the effects of tourism on regional output, demand, wages, employment and national and regional taxes in Central Finland.,The author’s regional input–output analysis reveals that tourism has a substantial impact on production in Central Finland (including the direct and indirect effects of consumption by tourists in different sectors). Moreover, the effects of tourism expenditures on employment and residents’ incomes in tourism-related sectors in Central Finland are quite significant.,Many limitations of this study stem from the assumptions of the input–output model. Other limitations relate to the analysis of the impacts of tourism on household taxes, savings, consumption and net income. Our study uses average figures, which may overstate the effect of tourist expenditures on taxes because tourism jobs are often low paying.,The study yields results that can be used to frame regional policy. The results may be useful for policymakers in planning for tourist attractions. Furthermore, local authorities may use the results to guide decisions regarding infrastructure investments or improvements to the operating environment of tourism industries.,Many studies analyse the economic impact of events at the regional level using input–output analysis. National-level tourism impact studies using the input–output technique have also been conducted. Studies focussed on the economic impact of tourism at the regional level typically examine the macroeconomic (income, output and employment) effects of tourism. Consequently, these studies have focussed on estimating output, employment and income multipliers (Mazumder et al., 2012). The author’s contribution is a regional input–output analysis of direct and indirect impacts of tourism expenditures on production, demand, wages, income and employment in the whole economy at the regional level (in Central Finland). The author also analyses the impacts of tourism on national and regional taxes. The results of this study could be used by planners and policymakers involved in regional planning and development.

Does intersectoral labour mobility pay for academics

Labour mobility plays a significant role in the diffusion of knowledge and economic growth. In this study, we examined academics’ incentives for mobility among university, private sector and government jobs. Using register data on doctoral degree holders in Finland, we found that moving from academia to the private sector is related to higher subsequent earnings, particularly among young academics and in hard sciences. However, frequent mobility across sectors was related to lower subsequent earnings.