Estimating the Economic Impact of the Korean Casino Industry using an Input-Output Model

This paper aims to estimate the economic impacts of the Korean casino industry on the economy, using an input-output(I-O) model. To this end this study employed the latest I-O transactions tables developed by Bank of Korea (2007). The 404 x 404 national transactions tables were aggregated into 35 x 35 economic sectors where casino sector was disaggregated. Casino multipliers were derived from the I-O model in terms of output, income, employment, value added, and indirect tax. Furthermore, forward and backward linkage effects were also derived for the casino industry. The results of the study indicate that the casino multipliers of output, income, employment, value added, and tax were estimated to be 2.355, 0.417, 0.017, 1.281, and 0.357, respectively. The results also show that backward linkage effect was greater than forward linkage effect. The results indicate that casino revenues of US$1,717 million in 2007 generated $4,042 million of output, $716 million of personal income, $2,200 million of value added, and $613 million of indirect tax throughout direct, indirect, and induced impacts. 26,922 full-time jobs were also created from casino revenues throughout ripple effects. In particular, the Korean casino industry is more likely to generate tax revenue than any other economic sectors, indicating its privileged nature. Based on the findings of this study some implications were provided.