## 2 Literature Review
### Factors Affecting Household Income
#### 2.1.2 Macro Level Factors Affecting Household Income  
Four key factors affect household income at the macro level, encompassing cities or provinces. It delves into the roles of crises and shocks, government policies, population dynamics, and sectoral composition in influencing household income. _Crises and shocks_ play a pivotal role in affecting household income at the city or province level. Idiosyncratic and covariate shocks, such as natural disasters, can deeply impact the economic stability of communities. These shocks, along with pressures like rising costs of living, can lead to a gradual descent into poverty ([PERSON] et al., 2020). Additionally, economic crises, as experienced globally in 2009, can lead to fluctuations in household incomes despite political and social measures ([PERSON] and [PERSON], 2012). _Government policies_, particularly those focused on investment in education and infrastructure, are instrumental in shaping household income at a regional level. Educational attainment and workforce skills are key drivers of regional economic development, with regions boasting higher levels of education and skilled labour forces better positioned to attract investment, foster innovation, and achieve economic growth ([PERSON], 2009). This investment in human capital positively affects income collectively, as it enables the workforce to acquire skills relevant to the modern economy, thereby enhancing productivity and economic potential. The impact of education on income distribution is significant, particularly in reducing the income share of the rich and increasing that of the poor, although it does not significantly impact the middle class ([PERSON] et al., 2015). Moreover, the distribution of education plays a crucial role, where more equitable distribution leads to lower income inequality. Secondary education, in particular, is noted for its importance in reducing inequality compared to primary schooling. Furthermore, regional economic policies and structural funds, especially in the European Union, play a significant role in promoting economic growth and reducing regional disparities through investments in underdeveloped areas and infrastructure development ([PERSON] et al., 2023; [PERSON], 2009). _Population dynamics_: The growth and diversity of a population, particularly through migration driven by factors like quality of life and accessibility, also have a profound impact on household income at city or provincial levels. Supply-induced growth, fuelled by migration for reasons such as natural beauty or cultural appeal, not only increases the local labour supply but also directly influences the economic vitality of a region, thereby affecting average household incomes ([PERSON] and [PERSON], 2008). The presence of a diverse and highly educated immigrant population exemplifies the intricate link between demographic dynamics and income levels. The varied skills and educational backgrounds of these residents contribute to the economic complexity of the region, influencing average household income ([PERSON] and [PERSON], 2007). _Sectoral composition and development of industries_ within a city or province are fundamental to understanding and influencing household income at the macro level. Demand-induced growth, resulting from increased labour demand due to business or industry expansion, can lead to significant job creation and attract people from other areas, thereby affecting household income levels ([PERSON] and [PERSON], 2008). The type of dominant economic activities in a region and sector specialisation significantly affects regional income disparities ([PERSON] and [PERSON], 2012). The spatial distribution of economic activities, including the concentration and clustering of industries, also affects their average income ([PERSON] et al., 2007). Furthermore, the influence of working hours and specific high-paying industries on household income highlights the importance of sectoral specialisation in regional economic performance ([PERSON] and [PERSON], 2007).