Demo-Economic (DECON) Models

Based on work undertaken by Mangan and Phibbs (1989), I-O models can be extended as demographic-economic (DECON) models. The two key characteristics of the DECON model, when compared with a standard economic model, are as follows.

  1. The introduction of a population ‘sector’ (or row and column in the model) makes it possible to estimate the impact on local population levels of employment growth or decline.
  2. The introduction of an unemployed ‘sector’ makes it possible to account for the consumption-induced impact of the unemployed in response to economic growth or decline. 
The Population Sector

The introduction of a population ‘sector’ to the standard I-O model allows for the calculation of population multipliers. These multipliers measure the flow-on population impact resulting from an initial population change attributable to employment growth or decline in a particular sector of the regional economy. 

The Unemployed Sector 

The introduction of an unemployed ‘sector’ to the standard I-O model makes it possible to more accurately account for the consumption-induced impact of the unemployed in response to economic growth or decline.

Through the inclusion of an unemployed row and column in the 'closed' direct coefficients matrix of the standard I-O model it is possible to calculate Type IV multipliers (for output, GSP, household income and employment). 

In situations where at least some of the unemployed remain in a region after losing their job (negative employment impact) or some of the new jobs in a region are filled by previously unemployed locals (positive employment impact), Type IV multipliers will be smaller than the more frequently used Type II multipliers.

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