Measuring the local economic impact of universities: an approach that considers uncertainty

The contribution of universities to society is due to both supply and demand side effects, the latter being associated with the injection of demand as a result of the activities these institutions carry out. This paper focuses on the impact of the demand side by designing a methodology based on Monte Carlo simulations so as to introduce stochastic elements in calculating the economic impact of universities. We apply this methodology to the case of Valencian state universities, introducing stochastic elements in all the elements which imply assumptions with uncertainty. The results highlight the importance of considering uncertainty by generating multipliers which can vary around the average value by 18% in the case of output and employment, and 10% in the case of income.