Income distribution in Virginia: the effect of intersectoral linkages on the short-run size distribution of income in small regions

The purpose of this study is to assess the role intersectoral linkages play in shaping the short-run size distribution of household income. Input-output models are constructed for four regions in Virginia using secondary data. Two distinguishing features of these models are that the household sector is disaggregated into 12 income classes and unemployment benefits are an endogenous component of household income. Using these models, it is concluded that: (a) As linkages increase, the effects on inequality of changes in different components of final demand converge. (b) Increasing the degree of linkage, with constant industry mix, will tend to increase inequality. (c) Although the degree and pattern of linkages among household groups varies from region to region, all income groups are more strongly linked to middle income households than to either high or low income households.