Demographic Challenges to Regional Development

While the field of regional science has focused considerable attention on the role of structural change in affecting regional development, relatively modest attention has been directed to the influence of demographic-induced changes with the exception of migration and the impact of the demographic transition in developing countries. Further, most models of the regional economy portray significant disaggregation of the industrial system yet often capture the impacts of households in one sector. Increasing attention to household heterogeneity is justified on the basis of different consumption behavior by age, income and location. Since households account for 40–70 % of gross domestic product on the expenditure side, addressing the role of household heterogeneity would appear to be essential. In this paper, a review of recent work that captures this heterogeneity will be reviewed and some illustrative results from applications in Korea and the US will be provided.