THE ECONOMIC IMPACT of Uvic September 1995
Total Page：16
File Type：pdf, Size：1020Kb
THE ECONOMIC IMPACT OF THE UNIVERSITY OF VICTORIA Prepared by: Stephen Kosempel Institutional Analysis University of Victoria September 1995 Preface PREFACE The Economic Impact of the University of Victoria, was prepared to outline and quantify the many benefits of the University that accrue to the University community, the province and government, but which are often not visible or understood. The economic impact analysis in this report recognizes the valuable contributions of others to improving the techniques for estimating the impact of institutions of higher learning. Whenever possible, an attempt has been made to expand upon previous work. For example, our treatment of the returns to education recognizes differences in expected returns across degree types and between genders. This study also distinguishes between the University's impact on its local economy, the Province of B.C. and government finances. Earlier drafts of this report were reviewed by faculty members in UVic's Department of Economics, the School of Public Administration and Office of the Vice-President Academic, colleagues in UVic's Office of Institutional Analysis, and university administrators in UVic's Office of Public Relations and Information Services. Their comments and suggestions have been incorporated into this document, and I thank them for their input. In particular I would like to thank Dr. John Schofield, Jim Currie, Robert Lee and Dr. Gerald Walter who provided valuable assistance throughout the entire analysis. In addition, I am grateful to the many Departments and Offices at the University which provided information for this study. However, I assume sole responsibility for any errors, confusion or other short-comings which remain. ii Executive Summary THE ECONOMIC IMPACT OF THE UNIVERSITY OF VICTORIA EXECUTIVE SUMMARY In addition to the educational services provided for students by the University of Victoria (UVic), the University offers many learning and cultural experiences for the wider community. The large number of spectators at UVic's athletic events, concerts, theatre performances, exhibitions, ceremonies, and public lectures, suggest that local residents recognize the value of these services. In addition to these advantages, however, the University generates important monetary benefits for the economies in which it is located and the governments which fund it. The study employs a number of economic models, each designed to measure a different aspect of the economic impact of the University on stakeholder communities1. The models, together with the results generated using these models, are as follows: • The Regional Spending Impact Assessment Model (Model 1) measures the "total" amount of regional income and employment created through expenditures by the University and its faculty, staff, students and visitors to the campus. UVic is the fourth largest employer in the Capital Regional District (CRD), and directly employs a workforce of approximately 3,100 people. In addition, University-related spending in the community indirectly supports jobs and creates income in other sectors of the regional economy. In total, it is estimated that UVic supported 9,971 local jobs and is responsible for generating $258 million in income for the CRD, during the 1993/94 year. • The Regional Export Base Model (Model 2a) measures the "change" in regional (CRD) income and employment which would result if the University was somehow removed from the province. This Model views the University as a "regional exporter", and estimates UVic's economic impact as a function of the money it brings into the community from external sources (i.e. federal tax dollars, non-regional provincial tax 1Conservative assumptions were used throughout the study in order to generate "lower bound" estimates of UVic's economic impact on those communities, rather than estimates that could be interpreted as our "best guesses". iii Executive Summary dollars2, academic fees of students of non-local origin, etc.). The results of this analysis indicate that if the University of Victoria had not existed during the 1993/94 year, income in the CRD would have fallen by $219 million and an estimated 8,454 jobs would have been lost to the region. • The Provincial Export Base Model (Model 2b) measures the increase in provincial economic activity resulting from the University's annual operation. UVic's existence in B.C. attracts dollars to the province from beyond3. Assuming the extreme hypothetical situation in which the University was removed from the province, these funds would go elsewhere and would negatively affect economic activity in British Columbia. By viewing UVic as a "provincial exporter" it is estimated that the University is responsible for generating $97 million in income and employing 3,730 British Columbians, during the 1993/94 year4. • The Returns to Investments in Education Model (Model 3) measures the long-term financial benefit of an educated society, and calculates the returns to government investments in education at UVic5. The economic value of UVic's graduates is determined by measuring the premiums paid to obtain this supply of highly productive labour6. It is estimated that the additional output expected to be produced by the 1993/94 graduating class created a benefit for society in 1993 that exceeded the cost of education (including all government financial support of education at UVic) by $73 million. Furthermore, the tax revenue expected to be generated on the 2In other words, provincial government tax revenue generated from B.C. citizens residing beyond the CRD. 3For example, federal research grants, spending by students of non-provincial origin, etc.. 4Although it may seem surprising that the University generates more income and supports more jobs in the region than in the province, this statistic is a reflection of the fact that the resources devoted to the University have alternative value outside the local community. For example, if the University was to close some faculty and staff would relocate to other universities in British Columbia, or obtain employment in other sectors of the provincial economy. Although these jobs would be lost to the region, from a provincial perspective they represent a transfer of employment between communities (i.e. no net change in provincial employment). 5Unfortunately, the long-term benefits of an educated society and knowledge advancements through research cannot be isolated accurately within a micro economy. As such, the analysis of the University's long-term economic impacts is restricted to the provincial economy. 6The financial benefit to society is measured only to the extent that graduates increase output. The analysis does not capture a number of unquantifiable and intangible benefits that accrue to both individuals educated and society at large as a result of the provision of post-secondary education. iv Executive Summary additional earnings of UVic's graduates created a benefit for government in 1993 that exceeded direct public outlays to the University by $25 million. • The Returns to University Research Model (Model 4) measures the provincial benefits of UVic's research. The University's research activities and facilities, and its supply of talented students and faculty, attract many businesses to British Columbia. The output of companies that have directly, or indirectly, spun-off UVic's research activity is included in the analysis as an economic contribution of the University to the province. More importantly however, knowledge advances through research improve the competitiveness of provincial industries and lead to cost savings. It is estimated that UVic's research provided benefits to the province valued between $25 million and $42 million, during the 1993/94 year, whereas, the cost of research at UVic to the province was only $2 million. • By adding (i) the impact of the University's export sales (Model 2b) to, (ii) adjusted estimates for the returns to education (Model 3) and (iii) the most conservative estimate for the provincial return to research (Model 4), it is estimated that if the University of Victoria had not existed during the 1993/94 year, total wealth in British Columbia would have fallen by some $182 million. In conclusion, the University of Victoria creates a significant economic impact in various different ways. v Table of Contents TABLE OF CONTENTS PREFACE ....................................................................................................................... ii EXECUTIVE SUMMARY............................................................................................. iii TABLE OF CONTENTS ................................................................................................ vi INTRODUCTION........................................................................................................... 1 MODEL 1: REGIONAL SPENDING IMPACT ASSESSMENT.................................. 4 Section 1.1: Introduction ..................................................................................... 4 Section 1.2: Faculty and Staff Income ................................................................ 4 Section 1.3: Non-University Expenditures by Full-Time Students..................... 5 Section 1.4: Direct Local Spending by the University ........................................ 6 Section 1.5: The Non-University Expenditures of Visitors to the Campus ........ 7 Section 1.6: Total University-Related Local Expenditures and Indirect Income Formation ..............................................................................................