The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates
AbstractDespite a broad consensus on the need to take into account the value of public services and geographical cost of living differences when measuring poverty, there is little reliable evidence on how these factors actually affect poverty estimates. Unlike the standard approach in studies of the distribution of public services, this paper employs a method for valuing sector-specific local public services that allows for differences between municipalities in unit costs for providing public services. Furthermore, recipient frequencies in various demographic groups are used as the basis for determining the allocation of the value of these services on citizens of the municipalities. Geographical differences in living costs are taken into account by using municipal housing price indices or by replacing the country-specific poverty line with municipal-specific poverty lines. Applying Norwegian register data for the period 1993-2001, we find that disregarding the value of local public services and geographical cost of living differences yields a misleading picture of poverty.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3686.
Length: 40 pages
Date of creation: Sep 2008
Date of revision:
Publication status: published as 'The Distributional Impact of Public Services When Needs Differ' in: Journal of Public Economics, 2010, 94 (9-10), 549 - 562
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Other versions of this item:
- Rolf Aaberge & Audun Langørgen & Magne Mogstad & Marit Østensen, 2008. "The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates," Discussion Papers 551, Research Department of Statistics Norway.
- Aaberge, Rolf & Bhuller, Manudeep & Langørgen, Audun & Mogstad, Magne, 2010. "The Distributional Impact of Public Services When Needs Differ," IZA Discussion Papers 4826, Institute for the Study of Labor (IZA).
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-29 (All new papers)
- NEP-GEO-2008-09-29 (Economic Geography)
- NEP-URE-2008-09-29 (Urban & Real Estate Economics)
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