Economic Impacts of Historic Preservation in Nebraska
Publication Year: 2007

Economic Impacts of Historic Preservation in Nebraska


Lahr, M.L., Listokin, D., Grady, B., Yemen, C., Jiang, P., Ko, D.K., & Jain, H. (October 2007). Economic Impacts of Historic Preservation in Nebraska. Center for Urban Policy Research at the Edward J. Bloustein School of Planning and Public Policy Rutgers, The State University of New Jersey.

This study examines the many significant economic effects of historic preservation in Nebraska. It is, to date, the most detailed statewide analysis of preservation’s economic impacts. The study examines the total economic effects of historic preservation, encompassing both the direct and multiplier effects. The direct impact component consists of labor and material purchases made specifically for the preservation activity. The multiplier effects incorporate what are referred to as indirect and induced economic consequences. The indirect impact component consists of spending on goods and services by industries that produce the items purchased for the historic preservation activity. The induced impact component focuses on the expenditures made by the households of workers involved either directly or indirectly with the activity. To illustrate, lumber purchased at a hardware store for historic rehabilitation is a direct impact. The purchases of the mill that produced the lumber are an indirect impact. The household expenditures of the workers at both the mill and the hardware store are induced impacts. Economists estimate direct, indirect, and induced effects using an input-output model (I-O). This study specifies the total economic effects of the major components of historic preservation in Nebraska through a state-of-the-art I-O model developed by the Center for Urban Policy Research (CUPR) for the National Park Service, Division of Cultural Resources, National Center for Preservation Technology and Training. The model is termed the Preservation Economic Impact Model (PEIM). The historic preservation components considered by the PEIM include historic rehabilitation, heritage tourism, the Nebraska Lied Main Street Program, and tax incentives. The results of the PEIM model include many fields of data. The fields most relevant to this study are the total impacts of the following:

  • Jobs: Employment, both part- and full-time, by place of work, estimated using the typical job characteristics of each industry. (Manufacturing jobs, for example, tend to be full-time; in retail trade and real estate, part-time jobs predominate.) All jobs generated at businesses in the region are included, even though the associated labor income of in-commuters may be spent outside of the region. In this study, all results are for activities occurring within the time frame of one year. Thus, the job figures should be read as job-years, where several individuals might fill one job-year on any given project.
  •  Income: “Earned” or “labor” income, specifically wages, salaries, and proprietors’ income. Income does not include non-wage compensation (such as benefits, pensions, or insurance); transfer payments; or dividends, interest, or rents.
  • Wealth: Value added — the equivalent at the subnational level of gross domestic product (GDP). At the state level, this is called gross state product (GSP) or, in some government data, GDP by state. Value added is widely accepted by economists as the best measure of economic well-being. It is estimated from state-level data by industry. For a firm, value added is the difference between the value of goods and services produced and the value of goods and non-labor services purchased. For an industry, therefore, it is composed of labor income (net of taxes); taxes; non-wage labor compensation; profit (other than proprietors’ income); capital consumption allowances; and net interest, dividends, and rents received.
  • Output: Of the measures in any input-output report, perhaps the least well-defined one is that labeled “output.” Output is defined as the value of shipments, which is reported in the Economic Census. The value of shipments is very closely related to the notion of business revenues. Thus it is NOT the “output” to which most other economists refer and which is better known as “gross domestic product” (GDP). Within input-output analysis, “output” is also not the same as business revenues, for several reasons. It is probably better defined as net business receipts, however. First, establishments often sell some of their output to themselves and therefore do not ship it. Hence, such sales cannot be included in the Census’s tally of the value of shipments. Second, to avoid some double counting in national accounts (those used to produce input-output tables), “output” in the wholesale and retail trade industries is measured simply as their margins, which is value added plus the costs of inputs used in the course of doing business. That is, for these trade industries, “output” does NOT include the value of the items stocked on shelves.
  • Taxes: Tax revenues generated by the activity. The tax revenues are detailed for the federal, state, and local levels of government. Totals are calculated by industry. Federal tax revenues include corporate and personal income, Social Security, and excise taxes, estimated from calculations of value added and income generated. State tax revenues include income, excise, sales, and other state taxes, estimated from calculations of value added and income generated (e.g. visitor purchases). Local tax revenues include payments to sub-state governments, mainly through property taxes on new worker households and businesses. Local tax revenues can also include sales and other taxes.

Subject Areas

Urban Policy
Additional Topics