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Demographic Demand Systems With Application To Equivalence Scales Estimation And Inequality Analysis: The Australian Evidence

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  • PAUL BLACKLOW
  • AARON NICHOLAS
  • RANJAN RAY

Abstract

This paper proposes and applies an alternative demographic procedure for extending a demand system to allow for the effect of household size and composition changes, along with price changes, on expenditure allocation. The demographic procedure is applied to two recent demand functional forms to obtain their estimable demographic extensions. The estimation on pooled time series of Australian Household Expenditure Surveys yields sensible and robust estimates of the equivalence scale, and of its variation with relative prices. Further evidence on the usefulness of this procedure is provided by using it to evaluate the nature and magnitude of the inequality bias of relative price changes in Australia over a period from the late 1980s to the early part of the new millennium. Copyright 2010 The Authors. Australian Economic Papers 2010 Blackwell Publishing Ltd/University of Adelaide and Flinders University .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Australian Economic Papers.

Volume (Year): 49 (2010)
Issue (Month): 3 (09)
Pages: 161-179

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Handle: RePEc:bla:ausecp:v:49:y:2010:i:3:p:161-179

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  1. Blacklow, P. & Ray, R., 1999. "A Comparison of Income and Expenditure Inequality Estimates: the Australian Evidence, 1975/76 to 1993/94," Papers 1999-05, Tasmania - Department of Economics.
  2. Ray, Ranjan, 1983. "Measuring the costs of children : An alternative approach," Journal of Public Economics, Elsevier, vol. 22(1), pages 89-102, October.
  3. Arthur Lewbel & Krishna Pendakur, 2008. "Estimation of Collective Household Models With Engel Curves," Boston College Working Papers in Economics 694, Boston College Department of Economics.
  4. Muellbauer, John, 1974. "Prices and Inequality: The United Kingdom Experience," Economic Journal, Royal Economic Society, vol. 84(333), pages 32-55, March.
  5. Blacklow, Paul & Cooper, Russell & Ham, Roger & McLaren, Keith, 2007. "A Regular Demand System with Commodity-Specific Demographic Effects," Working Papers 818, University of Tasmania, School of Economics and Finance.
  6. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
  7. Pendakur, K., 1999. "Taking Prices Seriously in the Measurement of Inequality," Discussion Papers dp99-7, Department of Economics, Simon Fraser University.
  8. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-21, May.
  9. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  10. Lancaster, Geoffrey & Ray, Ranjan & Valenzuela, Maria Rebecca, 1999. "A Cross-Country Study of Household Poverty and Inequality on Unit Record Household Budget Data," Economic Development and Cultural Change, University of Chicago Press, vol. 48(1), pages 177-208, October.
  11. Russel J. Cooper & Keith R. McLaren, 1992. "An Empirically Oriented Demand System with Improved Regularity Properties," Canadian Journal of Economics, Canadian Economics Association, vol. 25(3), pages 652-68, August.
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Cited by:
  1. Aleksandr Vashchilko, 2012. "Households' Expenditure Patterns in Belarus," BEROC Working Paper Series 20, Belarusian Economic Research and Outreach Center (BEROC).

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