The Economic Impact of Kalamazoo College on the Local Economy
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This paper summarizes the range of impacts a college may have on a local economy as well as the major methodology used in measuring these impacts. The two major ways a liberal arts college can impact its local economy are through short-run expenditure impacts and long-run human capital, or knowledge, impacts. The economic impact is generally measured in terms of the number of jobs and income directly and indirectly created in the local economy as a result of the college. Indirect impacts, also known as multiplier effects, show how the direct impacts created by the college generate additional effects within the local economy. Data regarding college operational expenditures, staff and faculty salaries & wages paid by the college, student expenditure data, and student visitor expenditure data, among other factors, are utilized in economic impact analyses to show the local effects of a college. As a case study, an economic impact analysis was performed for Kalamazoo College on the Kalamazoo-Portage Metropolitan Statistical Area (MSA) for the 2008/2009 academic year. A student spending survey was administered and used to estimate the average expenditures of Kalamazoo College students and their visitors in the local area. Data regarding college expenditures and wages & salaries paid to college employees were collected directly from Kalamazoo College. The results of this study are reported in the number of jobs, income, and output created within the Kalamazoo-Portage MSA as a result of Kalamazoo College. The overall value of output generated in the region for one academic year was $40.7 million. Gross Regional Product in the area increased by $3 I .1 million and the total personal income impact of the college was $22.5 million. Kalamazoo College and its students created a total employment impact of604 jobs, 350 of which were directly employed by the college. The total Kalamazoo College employment multiplier was 1. 73. In other words, on average, every 10 employees at the college support 7 non-college workers in the MSA. Kalamazoo College operational expenditures had an employment multiplier of 1.58 and an earnings multiplier of 1.65.