10 Fraser of Allander Institute
Methodology
Annex A
Input-Output Modelling
The data for the modelling has been provided by City of Glasgow College and the totals match the
corresponding parts of the College's financial statements.
The data is split into operating expenditure and capital expenditure, with wages separated from
operating expenditures. Expenditures are then matched to sectors of the economy:
■ For capital expenditure, where possible, every expenditure with a company was matched.
■ For operating expenditure, firms representing the top 80% of expenditure were matched and
the total operating expenditure is assumed to match the same sectoral spread.
Note, part of operating expenses was a unitary interest charge for the construction of the new City
Campus. The capital and interest element of this was removed from the operating expenditure
analysis. Instead, the full cost of constructing the campus was included in the capital expenditure
programme. The operating services part of the unitary interest charge remained in operating
expenses as this related to economic activities happening at the time of payment, and the activities
represented operational rather than capital activities.
Following standard regional modelling practices, our references to GDP are in fact GVA.
Additionally, our references to employment supported refer to full-time equivalent (FTE) employment.
Ten FTE employment can represent ten people employed full-time for a year, or twenty people
employed working part-time for a year, etc.
We use an input-output model to obtain direct, indirect and induced effects.
This analytical industry by industry framework provides a detailed view of the inputs to industries,
i.e. the purchases from other industries, from labour and from other countries through imports, and
of the sales of industries, including to other industries and to categories of final demand such as
households, government, exports and so on (Eurostat, 2008). This can then be used to calculate
output, GVA and employment impacts related to the spending of the City of Glasgow College. All
modelling incorporates the latest input-output tables for Scotland (2016), published by the Scottish
Government.
In order to ensure comparability of across time, all prices have been adjusted to 2018⁄19 for using HM
Treasury GDP deflators, published in March 2020.
CGE Methodology
McGregor and Ross (2017) outline a number of possible approaches to conducting an analysis of
the impact on the economy of increases in human capital. The "micro-to-macro" method is the most
promising . This approach uses relevant micro-econometric evidence of the returns to education to
inform simulations which are then run through a detailed economic model of the Scottish economy.