Moving Beyond the Modeling of Regional Economic Growth: A Study of How Income is Distributed to Rural Households

Abstract

This article discusses the use of regional economic modeling techniques to determine the household income distribution impacts associated with various economic sectors. Determining the distributional characteristics of economic sectors requires identifying the relationship between aggregate factor income change and its distribution to local households. Social accounting matrix analysis provides an analytic framework to track the flow of income from local productive activities to households differentiated by income category. Its use is illustrated with an analysis of alternative economic development strategies for a rural region. To the extent that local economic develop ment policy can differentially influence the level of local productive activity, it becomes possible to assess who benefits by economic growth. Incorporating information related to income distribution allows local policy makers to move beyond the pursuit of aggregate economic growth to incorporate additional objectives that are important to overall regional development.

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