The calculation
The calculations behind DNB Ring effects are produced by the social economists at NyAnalyse and are based on key figures from the national accounts, the annual accounts of private companies, the intersection of Statistics Norway and relevant tax and tax rates (2023). The model used is called the Wider Economic Impact Model (WEI model). The model shows in a simple way how the company has a positive economic effect on employment, taxes and fees, purchasing power, subcontractors and the rest of the economy. Overall, this activity provides value added value in many stages with subsequent taxes and fees to the state and municipality. These are public incomes that are used in the next round to finance many different welfare benefits. We have therefore taken an illustration of what this tax contribution can finance by teachers or nurses etc. in a single budget year.
About direct and indirect effects from the companies
By direct effects we mean revenue, purchase of goods and services, value creation, jobs, VAT and taxes paid to the state and municipality from the company (corporate tax) and the employees (personal tax).
We also show purchasing power from the company. Through the wageing of employees, the companies create ripple effects in the form of increased purchasing power locally. This purchasing power will contribute to further value creation and jobs. Purchasing power is defined as gross salary income less taxes and fees (net salary income).
In the solution, you will also be able to see the indirect FTEs’ position at Norwegian subcontractors and in the value chain related to the company’s external purchase of goods and services (explained below).
Ripple effects throughout the value chain
By indirect effects we mean all the ripple effects that arise from, for example, business A buying goods and services from sub-contractor B, C, D etc. Such purchases facilitate revenue, value creation and employment in the first paragraph. At the same time, businesses B, C and D as a result of this revenue will also increase the purchase of goods and services from their subcontractors in the next round.
To take an example, a grocery store through its purchase of goods and services such as leasing of premises, insurance, canteen operations, craft services, Internet and other marketing, etc. will constitute a first positive effect of activity. Furthermore, as a result of increased turnover, these subcontractors will again ask for more goods and services from their subcontractors. This is called a second round effect, and this is how it continues. In our calculations, we have looked at the sum of such ripple effects, which spread through the Norwegian economy through many players and over time. Consumer effects on activity from the employee’s salary are not included.
The Ring Impact Calculation makes the social contribution from a company and their employees triggered by their own activity and indirectly by demand for goods and services from Norwegian subcontractors and other value chains visible. We limit the part of the activity that is in Norway corrected for importing goods and services from abroad.
Base figures
Applies to private Norwegian-registered companies (AS, ASA, ANS, DA, BB, ENK, GJ, KS, NUF, SA, VPF, Sparebank and partrederi) with activity and available annual accounts for 2023.
The annual accounts forn 2023 for all the companies in our database are taken from regnskapstall.no, which in turn has taken their figures from Brønnøysund Register Centre.
Access and tables are taken from Statistics Norway (2023).
National accounting figures for 2023 distributed by subgroup are derived from SSB.
Employer’s contribution rate distributed by municipality has been obtained from the Norwegian Tax Administration (2023).
Company tax rate and average tax rate for personal income are taken from Prop. 1 LS Taxes, fees and duties in 2023, while net product taxes (Tax) distributed by industry are derived from national accounts.
Figures for average annual wages for teachers and other budget costs are taken from SSB, the Norwegian Ministry of Finance, the Ministry of Culture, dinside.no and Kommunenes sentralforbund (KS).