Sub-Regional Impact of HEIs – IO simulation of demand impacts on the City of Glasgow K. Hermannsson, P. McGregor, N. Pappas and K. Swales Fraser of Allander Institute, Department of Economics University of Strathclyde and CPPR 48th Congress of the European Regional Science Association Liverpool, England, August 27-31, 2008

2 Outline Overview Glasgow’s HEIs Construction of Glasgow City IO Simulation results Future Work

3 Background Impact of HEIs initiative –15 UK Universities –9 projects – Glasgow project: –Extension of the HEIs impact initiative backed by CPPR and Strathclyde University –Model the impacts of HEIs at a sub-regional level –Use multi-sectoral regional and inter-regional models –I-O, SAM and CGE

4 Glasgow’s HEIs Strong presence in the city Spent £618m in 2006 Staff 10,000 FTE Students 61,000 (Full time = ) Diverse institutions

5 Income of Glasgow’s HEIs by source 2005/06, £ thousands. (HESA, 2007) Glasgow Caledonian University Glasgow School of Art The University of GlasgowRSAMD The University Of Strathclyde Total Glasgow Funding Council grants 53,1309,897130,9346,09685,883285,940 Tuition fees & education grants & contracts 23,0263,69453,2052,27651,097133,298 Research grants & contracts 4, , ,398109,822 Other income 17,1231,45947,4471,49020,91088,429 Endowment & investment income , ,7669,758 Total income 97,64415,799312,37210,378191,054627,247 Funding Council grants 54%63%42%59%45%46% Tuition fees & education grants & contracts 24%23%17%22%27%21% Research grants & contracts 4% 24%1%15%18% Other income 18%9%15%14%11%14% Endowment & investment income 0%1%2%4%2% Total 100%

6 Income of Glasgow’s HEIs by source (2) 2005/06, £ thousands. (HESA, 2007) Scottish GovernmentExternal income Operational IncomeTotal income Caledonian72,14974%8,2698%17,22618%97,644100% GSA11,90375%2,00613%1,89012%15,799100% Glasgow162,98252%92,80930%56,58118%312,372100% RSAMD7,03168%7537%2,59425%10,378100% Strathclyde111,79259%45,61624%33,64618%191,054100% Total365,85758%149,45324%111,93718%627,247100%

7 Staff FTE by activity 2005/06, £ thousands. (HESA, 2007) Glasgow Caledonian University Glasgow School of Art The University of GlasgowRSAMD The Universit y of Strathcly de Total Glasgow Academic professionals ,047461,2584,300 Non-academic professionals Technical support, student support, library431901, ,348 Other support ,373 Housekeeping Atypical staff Total all staff FTE1, , ,09010,002

8 Students by institution and origin Origin UniversityScotlandRUKROWTotalScotlandRUKROW Glasgow Caledonian University14, ,22017,04588%5%7% Glasgow School of Art ,55553%28%19% The University of Glasgow18,6302,5402,42023,59079%11%10% The RSAMD %19%16% The University of Strathclyde21, ,58525,10586%4%10% 56,3954,9456,63567,97583%7%10%

9 Glasgow and Strathclyde Population (employment) Scotland 5,095,000 (2,370,000) Glasgow 578,000 (392,000) Rest of Strathclyde 1,626,000 (566,000)

10 Interactions over space (1) Where do Scottish students go? ≈ 94% in Scotland ≈ 33% in Glasgow Where do students in Glasgow come from? –Glasgow City 19% –Rest of Strathclyde 41% –Rest of Scotland 15% –Rest of UK 7% –Rest of World 18%

11 How do HEI students in Glasgow live? –Halls: 8.4% –Other/Not known: 11.3% –Own home / Private rental: 44.9% –Parental / Guardian home: 35.3% Where do they go to after graduation? * –Glasgow City: 42% –Rest of Strathclyde: 28% –Rest of Scotland: 22% –Rest of UK: 5% –Rest of World: 3% * According to a survey of EU students taken 6 months after graduation Interactions over space (2)

12 Interactions over space (3) BeforeAfterDiff. Glasgow City19%42%23% Rest of Strathclyde41%28%-13% Rest of Scotland15%22%7% Rest of UK7%5%-2% Rest of World18%3%- 15%

13 Glasgow City IO Estimated using Location Quotients (LQ) –Based on augmented Scottish IO Simple approach Not without faults –Interregional trade ↓ → impact↑ Glasgow + ROS = Scotland

14 Glasgow City IO (2) Employment → industrial structure –Sector Gross outputs –Primary inputs –Final demands Intermediate transactions –Scottish A-matrix * LQ’s

15 Glasgow City IO (3) Glasgow IO tableScotland IO table Output multipliers Import propensity Output multipliers Import propensity Type IType II Type IType II Glasgow Caledonian University % % Glasgow School of Art % % The University of Glasgow % % The RSAMD % % The University of Strathclyde % %

16 Simulation results: In a nutshell GDP impact: £856m –5.6% of Glasgow GDP Of which: –Institutions and staff £628m – 4.1% of GGDP –Students £228m – 1.5% of GGDP

17 Simulation results: Shutdown GDP impact £m. UniversityGlasgowScotland Glasgow Caledonian University Glasgow School of Art1720 The University of Glasgow The Royal Scottish Academy of Music and Drama1013 The University of Strathclyde Total628774

18 Simulation results: Student impacts GDP impact £m. UniversityScotlandRUKROWTotal Glasgow Caledonian University Glasgow School of Art3115 The University of Glasgow The Royal Scottish Academy of Music and Drama1002 The University of Strathclyde % of Glasgow GDP1.2%0.1% 1.5%

19 Simulation results: External income + Scot Gov funding GDP impact £m.Employment impact Scenario£ m.%absolute% External income dries up-150-1% -3,561-1% External income doubles1501%3,5611% HEI income from gov + £100 m1011%2,4011% HEI income from gov + £100 m, other public spending in GLA -£100m170%-3230% HEI income from gov + £100 m, balanced in national budget750%1,4930% HEI income from gov - £100 m, balanced in national budget-750% -1,4930%

20 Model considerations Accuracy of multipliers –Suspect them to be overstated Boundaries –IO table implicitely captures ROS activity General IO limitations

21 Future work Multi region IO –Interregional linkages Hybrid IO table –More accurate sub-regional multipliers SAM –Detailed treatment of households CGE –Introduce supply side