Introduction

The System of National Accounts (SNA) described in Chapter 4 was developed from the basic concepts of the circular flow of income and expenditures in an economy. As noted in that chapter, the SNA provides a convenient and essentially standardized framework for compiling and organizing aggregate national statistics that characterize the economic profile of an economy. When the SNA s combined with the Input–Output accounts, which incorporate the interindustry activity associated with intermediate as well as final production and consumption of goods and services in the economy, the picture of the economy becomes more comprehensive. However, the framework as t has been developed so far in this text provides relatively little insight into the role of people and social institutions in the economy, e.g., labor and households, human capital, and social welfare.

Alogical goal then, and the focus of this chapter, is to extend the SNA/IO framework to add a more detailed characterization of the roles of labor, households, and the social institutions of the economy. In particular, we seek to capture in more detail the employment features of the economy, including such factors as income from employment and its disposition, labor costs, and the demographics of the work force that comprise the market for supply and demand of labor. Moreover, in many nations' compilations of national statistics, no framework exists to ensure consistency across statistics from various sources, let alone reconciling them with basic economic accounts. Both goals can be accomplished by means of a so-called Social Accounting Matrix (SAM), development of which is the principal focus of this chapter.