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CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

TABLE OF CONTENTS

16.1 INTRODUCTION ......................................................................................................... 16-1

16.2 METHODOLOGY ........................................................................................................ 16-1
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CHAPTER 16. EMPLOYMENT IMPACT ANALYSIS

16.1 INTRODUCTION

The U.S. Department of Energy’s (DOE’s) employment impact analysis estimates

indirect national job creation or job elimination resulting from possible new energy conservation 

standards, due to reallocation of the associated expenditures for purchasing and operating certain 

equipment. DOE conducts this analysis for the notice of proposed rulemaking (NOPR) stage 

where it estimates national impacts on major sectors of the U.S. economy, using publicly 

available data.

Energy conservation standards can impact employment both directly and indirectly. Direct 

employment impacts are changes in the number of employees at the plants that produce the 

covered equipment, along with the affiliated distribution and service companies, resulting from 

standards. DOE evaluates direct employment impacts in its manufacturer impact analysis, as 

described in chapter 12 of this Technical Support Document. The employment impact analysis 

described in this chapter covers indirect employment impacts which may result from 

expenditures shifting between goods (the substitution effect) and changes in income and overall 

expenditure levels (the income effect) that occur due to the implementation of standards.

DOE expects new or amended energy conservation standards to decrease energy 

consumption and, therefore, reduce expenditures for energy. In turn, savings in energy 

expenditures may be redirected for new investment and other items. Notwithstanding, energy 

conservation standards may potentially increase the purchase price of equipment, including the 

retail price plus sales tax, and may increase installation costs.

Using an input-output model of the U.S. economy, the employment impact analysis seeks 

to estimate the year-to-year effect of these expenditure impacts on net national employment.

DOE intends the employment impact analysis to quantify the indirect employment impacts of 

these expenditure changes.

16.2 METHODOLOGY

To investigate the and indirect employment impacts, DOE uses the Pacific Northwest 

National Laboratory’s (PNNL’s) “Impact of Sector Energy Technologies” (ImSET 3.1.1) 

model.1 PNNL developed ImSET, a spreadsheet model of the U.S. economy that focuses on 187

sectors most relevant to industrial, commercial, and residential building energy use, for DOE’s 

Office of Energy Efficiency and Renewable Energy. ImSET is a special-purpose version of the 

U.S. Benchmark National Input-Output (I-O) model, which has been designed to estimate the 

national employment and income effects of energy saving technologies that are deployed by 

DOE’s Office of Energy Efficiency and Renewable Energy. In comparison with the previous 

versions of the model used in earlier rulemakings, this version allows for more complete and 

automated analysis of the essential features of energy efficiency investments in buildings, 

industry, transportation, and the electric power sectors.
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The ImSET software includes a computer-based I-O model with structural coefficients to 

characterize economic flows among the 187 sectors. ImSET’s national economic I-O structure is 

based on the 2002 Benchmark U.S. table, specially aggregated to 187 sectors.2

DOE intends to use the ImSet model to estimate changes in employment in the overall 

U.S. economy resulting from changes in expenditures in the various sectors of the economy.

DOE has designed the employment impact analysis to estimate the year-to-year net national 

employment effect of these different expenditure flows.
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REFERENCES

1. Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact of Sector Energy 

Technologies, 2005. Pacific Northwest National Laboratory. Richland, WA. Report No. 

PNNL- 15273. <http://www.pnl.gov/main/publications/external/technical_reports/PNNL15273.pdf>

2. Lawson, A. M., K. S. Bersani, M. Fahim-Nader, and J. Guo, Benchmark Input-Output 

Accounts of the U. S. Economy, 1997. Survey of Current Business, 2002: pp. pp. 19-117 

<http://www.bea.gov/scb/pdf/2002/12December/1202I-OAccounts2.pdf>