RIMS II Assumptions

RIMS II multipliers are based on the average relationships between the inputs and outputs produced in a local economy. The multipliers are a useful tool for studying the potential impacts of changes in economic activity. However, the relative simplicity of input-output multipliers comes at the cost of several limiting assumptions that produce what are likely to be upper bound estimates. Analysts are encouraged to carefully evaluate how closely these assumptions apply to their projects and to consider collecting additional information specific to their project to adjust their results.1

Assumptions of the model to keep in mind:

It is also worth keeping in mind that employment changes include both full and part-time jobs—this characteristic applies for all projects, but is especially important for service industries that have large shares of part-time employment.

The example below shows how the employment multiplier for a region can vary when local information is used to improve the accuracy of the multipliers because the model's assumptions do not hold. The example is a construction project for a health care facility.

Final-Demand Employment Multiplier for a Hypothetical
Region for Three Alternative Scenarios2
One Two Three
18.0 14.4 9.8

To learn more about how to use local information to refine your analysis, view an example of the Bill of Goods approach in greater detail here.