An Assessment Of The Assignment Method In Economic Base Analysis

Numerous techniques have been devised to make economic base analysis more cost-effective. The simplest of these, the assignment or assumption method, allocates the entire employment (income) of each industry to either the basic or nonbasic sector of the regional economy. Unfortunately, employment data have not been generally available in a form appropriate for evaluation of the assignment method. This paper combines a unique body of survey-generated employment data with OLS regression procedures in providing such an evaluation. Competing values of economic base multipliers, derived from the assignment method and the "correct" benchmark method, are estimated for various types of communities. These estimates, reflecting two rather different interpretations of the economic base logic, are shown to be remarkably similar in size, but not in composition. The study uses the Arizona Community Data Set, a data base covering 47 towns in the U.S. Southwest.