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The objective of the research was to demonstrate the need, feasibility and relevance of disaggregating by income group the endogenized household sector in the Canadian Input-Output (I-O) model. Personal expenditures and revenue sources were endogenized into Agriculture Canada's I-O open model. Two models were developed, Model 1 and Model 2. Model 1 was a closed model that assumed homogeneity among households. Model 2 relaxed the homogeneity assumption. / The superiority of Model 2 was empirically demonstrated by comparing the economic indicators generated by the models. The indicators of interest were industrial output, GDP at factor cost and the number of paid jobs. A sensitivity analysis investigated the impact of changes in wages and salaries and final demand on the models. Larger differences were found between the models when wages and salaries were stimulated. As hypothesized, Model 1 underestimated the contribution of the lowest wages and salaries group by 19.9 percent and overestimated the impact of the higher wages and salaries group by 19 percent. A $1 million increase in the final demand for agricultural, agri-food and petrochemical products was also simulated. The largest impacts on industrial output occurred when agricultural production was shocked ( $3.8 million). This was followed by agri-food products ($3.2 million) and petrochemical products ( $2.7 million). While differences in the models' estimates were minimal when changes in final demand were simulated, Model 2 generated additional information on the distribution of income. / In conclusion, the results generated by the I-O model with the disaggregated household sector, Model 2, were consistent with budget data and economic theory.

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