The role of households in sustaining rural economies: A structural path analysis

Rural households have become more diverse in terms of the geographic origin of their income and their spatial spending patterns. As a consequence, the economic well being of rural businesses and that of rural residents are less interdependent than in the past. This raises questions about the sustainability of rural economies and their vulnerability to external influences. The structural path approach is used to investigate the role played by different types of household in transmitting economic influence in the Western Isles region of Scotland. Households with children play the most significant role in connecting the local economic system. It is argued that structural path analysis can be used to provide policy relevant information, complementary to that gained from more conventional social accounting matrix multiplier decomposition techniques.