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

  • Geoffrey J. D. HewingsEmail author
  • Sang Gyoo Yoon
  • Seryoung Park
  • Tae-Jeong Kim
  • Kijin Kim
  • Kurt Kratena
Part of the Advances in Spatial Science book series (ADVSPATIAL)


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.


Human Capital Computable General Equilibrium Model Gross Regional Product Educational Investment Human Capital Stock 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Carroll CD (1997) Buffer-stock saving and the life cycle/permanent income hypothesis. Q J Econ 92:1–55CrossRefGoogle Scholar
  2. Deaton AS, Muellbauer J (1980a) An almost ideal demand system. Am Econ Rev 70:312–326Google Scholar
  3. Deaton AS, Muellbauer J (1980b) Economics and consumer behavior. University Press, CambridgeCrossRefGoogle Scholar
  4. Hägerstrand T (1970) What about people in regional science. Pap Reg Sci Assoc 24:6–21CrossRefGoogle Scholar
  5. Israilevich PR, Hewings GJD, Sonis M, Schindler GR (1997) Forecasting structural change with a regional econometric input-output model. J Reg Sci 37:565–590CrossRefGoogle Scholar
  6. Kim T-J, Hewings GJD (2013a) Inter-regional endogenous growth under the impacts of demographic changes. Appl Econ 45:3431–3449CrossRefGoogle Scholar
  7. Kim T-J, Hewings GJD (2013b) Endogenous growth in an ageing economy: evidence and policy measures. Ann Reg Sci 50:705–730CrossRefGoogle Scholar
  8. Kim K, Hewings GJD (2015) Bayesian estimation of labor demand by age: theoretical consistency and an application to an input-output model. Discussion Paper, 15-T-4 Regional Economics Applications Laboratory, University of Illinois,
  9. Kim T-J, Hewings GJD (2015) Ageing population in a regional economy: addressing household heterogeneity with a focus on migration status and investment in human capital. Int Reg Sci Rev 38:264–291CrossRefGoogle Scholar
  10. Kim K, Kratena K, Hewings GJD (2015) The extended econometric input-output model with heterogeneous household demand system. Econ Sys Res 27:257–285CrossRefGoogle Scholar
  11. Kim K, Kratena K, Hewings GJD (2016) Household disaggregation and forecasting in a regional economy within the framework of a regional econometric input-output model. Lett Spat Resour Sci 9:79–91CrossRefGoogle Scholar
  12. Kratena K, Temurshoev U (2016) Dynamic econometric IO modeling: new perspectives. In: Jackson R, Schaeffer P (eds) Regional research frontiers—vol. 2: methodological advances, regional systems modeling and open sciences. Springer, HeidelbergGoogle Scholar
  13. Ledent J (1977) Regional multiplier analysis: a demometric approach. Environ Plan A 10:537–560CrossRefGoogle Scholar
  14. Ludwig A, Schelkle T, Vogel E (2012) Demographic change, human capital and welfare. Rev Econ Dyn 15:94–107CrossRefGoogle Scholar
  15. Madland D (2015) Hollowed out: why the economy doesn’t work without a strong middle class. University of California Press, BerkeleyGoogle Scholar
  16. Munnell AA, Sass SA (2009) Working longer: the solution to the retirement income challenge. Brookings Institution, Washington, DCGoogle Scholar
  17. Park S, Hewings GJD (2009) Immigration, ageing and the regional economy. Cityscape 11:59–80Google Scholar
  18. Partridge MD, Rickman DS, Rose Olfert M, Ali K (2012) Dwindling U.S. internal migration: evidence of a spatial equilibrium or structural shifts in local labor markets? Reg Sci Urban Econ 42:375–388CrossRefGoogle Scholar
  19. Sadahiro A, Shimasawa M (2002) The computable overlapping generations model with an endogenous growth mechanism. Econ Model 20:1–24CrossRefGoogle Scholar
  20. Yoon SG, Hewings GJD (2006) Impacts of demographic changes in the Chicago region. Discussion Paper 06-T-7, Regional Economics Applications Laboratory, University of Illinois,

Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  • Geoffrey J. D. Hewings
    • 1
    Email author
  • Sang Gyoo Yoon
    • 2
  • Seryoung Park
    • 2
  • Tae-Jeong Kim
    • 2
  • Kijin Kim
    • 1
    • 3
  • Kurt Kratena
    • 1
    • 4
  1. 1.Regional Economics Applications LaboratoryUniversity of IllinoisUrbanaUSA
  2. 2.Bank of KoreaSeoulKorea
  3. 3.Asian Development BankManilaPhilippines
  4. 4.Centre of Economic Scenario Analysis and Research, Department of EconomicsLoyola University AndalucíaSevilleSpain

Personalised recommendations