Abstract
This paper presents a methodology for incorporating price-induced technological substitution into a regional input-output forecasting model. The model was used to determine the employment impacts of rapidly escalating energy costs on the Riverside-San Bernardino (California) SMSA. The results indicate that the substitution effect between energy and other goods was dominated by the income effect. A reallocation of consumer expenditures from labour intensive to energy intensive goods occured, resulting in a two-to threefold increase in the unemployment rate among low-skilled individuals.
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