Income Effects on Services Expenditures
AbstractEngel curves suffer from the fact that habit or addiction effects are not taken into account on cross sections. Also, income effects may differ between social groups, and cross-section parameters may be biased relatively to time-series estimations. We propose to estimate dynamic Engel curves on individual cross-section data using a new instrumentation of past expenditures based on cohort effects and compare the influence of income changes according to static and dynamic estimates. Finally, a domestic production model allows to calculate the opportunity cost of domestic activities and to explain the difference between the U.S. and European expenditures on services. The article uses the 1979, 1984, 1989 and 1995 Insee Family budget surveys.
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Bibliographic InfoPaper provided by AIAS, Amsterdam Institute for Advanced Labour Studies in its series DEMPATEM Working Papers with number wp7.
Date of creation: Feb 2004
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-26 (All new papers)
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