By Ashkan Masouman, Associate Research Fellow
This was my second presentation at the Western Region Science Association (WRSA) Annual Meeting (first being in 2013). So far, WRSA has been the only conference I have attended which has two sessions dedicated to input-output techniques and innovations. The chair, Prof. Geoffrey Hewings, and many of the attendees were experts in this field, and they all provided useful feedback into my research.
At this conference, I presented a paper titled, Embedding an inter-sectoral module into a dynamic framework to estimate regional employment.
This paper reviews attempts which have been proposed in the literature to relax the restrictive assumptions of a standalone input-output (IO) model, and suggests an innovative embedding technique to incorporate an IO component in an econometric framework.
This paper focuses particularly on endogenisation of the household sector, which exhibits the highest constant returns to scale. The constant returns to scale in the household sector especially increases in importance as we move from national economies to regional economies, such as the Illawarra. Most of the studies in the literature collapse the intermediate demand information into a solo composite variable. The intermediate demand information serves as an a priori data, which represents the inter-sectoral relationships within a regional economy.
In the WRSA paper, estimation of sectoral employment by embedding a priori information into a host econometric model is discussed. In the first section, an IO model is presented that allows for detailed and extensive data on inter-sectoral structure of the Illawarra economy. In the second section it is shown that use of a holistic embedded methodology in estimating dynamic and intensive labour changes in such a model relaxes some of the restrictive assumptions of the traditional input-output model and provides higher accuracy.
Ashkan Masouman is an Associate Research Fellow at SMART Infrastructure Facility. Ashkan specialises in regional and transport economics. This paper will be available upon publication of the conference proceedings.