Distributional Effects of Household Linkages

Abstract

Abstract The study uses input‐output models with disaggregated household sectors to demonstrate that important interhousehold linkages are ignored in standard input‐output models of both rural and urban regions. The results indicate that higher‐income households are not strongly linked to low‐income households and that, given equal changes in exogenous income, low‐income households will have much higher impacts on the local economy than high‐income households. In addition, significant differences in household linkages were found between rural and urban regions.