Demo-Economic (DECON) Models
Demo-Economic (DECON) Models
Based on work undertaken by Mangan and Phibbs (1989) and Fischer (1993), 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.
- 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.
- 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.