Unraveling the Household Heterogeneity in Regional Economic Models: Some Important Challenges

Geoffrey Hewings, Sang Gyoo Yoon, Seryoung Park, Tae-Jeong Kim, Kijin Kim and Kurt Kratena
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Sang Gyoo Yoon: Bank of Korea
Seryoung Park: Bank of Korea
Tae-Jeong Kim: Bank of Korea
Kijin Kim: University of Illinois
Kurt Kratena: University of Illinois

Chapter Chapter 2 in Regional Research Frontiers - Vol. 2, 2017, pp 23-47 from Springer

Abstract: Abstract Regional modelers have spent a great deal of time and energy worrying about the level of sectoral aggregation but relatively little time considering the implications of aggregation of households into a representative household. In the US, households account for 70% of GDP on the expenditure side and increasing concerns about rising income inequality suggest that greater household disaggregation might be warranted. This paper provides a sampling of some evidence of the impacts for such disaggregation in regional econometric-input-output and computable general equilibrium models; attention is directed to disaggregation by age and income and a variety of experiments reveal the implications on a regional economy over the short- and long-run. Given the increasing attention on income distribution and inequality, the opportunity exists to provide important contributions to this literature by exploring the mechanisms of income formation, especially from non-wage and salary sources.

Keywords: Human Capital; Computable General Equilibrium Model; Gross Regional Product; Educational Investment; Human Capital Stock (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/978-3-319-50590-9_2

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