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Equivalence Scales Based on Revealed Preference Consumption Expenditure Microdata - The Case of West Germany

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  • Merz, Joachim
  • Faik, Jürgen

Abstract

Equivalence scales are a prerequisite for any economic well-being comparison with measures on income distribution, inequality and poverty. This paper provides equivalence scales based on revealed preference consumption microdata for West Germany 1983. It is a part of a joint US and German research project comparing equivalence scales with consistent methods and similar microdata bases, recent income and consumption surveys of both countries. We concentrate on a single equation expenditure method with different Engel approaches as well as on a complete demand system approach. The complete demand system approach provides true, constant utility based equivalence scales and is specified by an extended linear expenditure system (ELES). While the Engel methods traditionally focus on food expenditures, the multiple equation expenditure system takes into account a full market basket with all its interdependencies and relative prices. Our equivalence scale study for West Germany based on actual available individual consumption expenditure data shows a variety of interesting results with regard to different goods and services baskets as well as to different household composition effects including the situation of the elderly, of the families with married couples and single mothers, and the cost of children. Our consumption results finally are compared to further consumption, expert, and subjective based equivalence scales.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16297.

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Date of creation: Feb 1994
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Handle: RePEc:pra:mprapa:16297

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Keywords: alternative equivalence scales; Germany; USA; distribution of income; inequality; poverty;

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References

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  1. Bruce Bradbury, 1992. "Measuring the Cost of Children," Discussion Papers, University of New South Wales, Social Policy Research Centre 0032, University of New South Wales, Social Policy Research Centre.
  2. Kapteyn, A.J. & Kooreman, P. & Willemse, R.J., 1988. "Some methodological issues in the implementation of subjective poverty definitions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-364358, Tilburg University.
  3. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, Wiley Blackwell, vol. 44(2), pages 77-124, April.
  4. Singh, Balvir & Nagar, A L, 1973. "Determination of Consumer Unit Scales," Econometrica, Econometric Society, Econometric Society, vol. 41(2), pages 347-55, March.
  5. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, Elsevier, vol. 8(2), pages 191-210, October.
  6. Kakwani, Nanak C, 1977. "On the Estimation of Consumer Unit Scales," The Review of Economics and Statistics, MIT Press, vol. 59(4), pages 507-10, November.
  7. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(414), pages 1067-82, September.
  8. Tsakloglou, Panos, 1991. "Estimation and Comparison of Two Simple Models of Equivalence Scales for the Cost of Children," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(405), pages 343-57, March.
  9. Bojer, Hilde, 1977. "The effect on consumption of household size and composition," European Economic Review, Elsevier, Elsevier, vol. 9(2), pages 169-193.
  10. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 87(347), pages 460-87, September.
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Citations

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Cited by:
  1. Joachim Merz, 2001. "Was fehlt in der EVS ? Eine Verteilungsanalyse hoher Einkommen mit der verknüpften Einkommensteuerstatistik für Selbständige und abhängig Beschäftigte," FFB-Discussionpaper, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg 30, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
  2. Leonardo Becchetti & Elena Giachin Ricca & Alessandra Pelloni, 2009. "Children, Happiness and Taxation," SOEPpapers on Multidisciplinary Panel Data Research 230, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Ulrich Widmaier & Hiltrud Niggemann & Joachim Merz, 1994. "What makes the Difference between Unsuccessful and Successful Firms in the German Mechanical Engineering Industry?," FFB-Discussionpaper, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg 11, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
  4. Merz, Joachim, 1995. "MICSIM : Concept, Developments and Applications of a PC-Microsimulation Model for Research and Teaching," MPRA Paper 16029, University Library of Munich, Germany.
  5. Merz, Joachim, 2002. "Reichtum in Deutschland: Hohe Einkommen, ihre Struktur und Verteilung," MPRA Paper 5992, University Library of Munich, Germany.
  6. Merz, Joachim, 1993. "Statistik und Freie Berufe im Rahmen einer empirischen Wirtschafts- und Sozialforschung," MPRA Paper 7237, University Library of Munich, Germany.
  7. Christian Dudel & Notburga Ott & Martin Werding, 2013. "Maintaining One's Living Standard at Old Age - What Does That Mean?: Evidence Using Panel Data from Germany," SOEPpapers on Multidisciplinary Panel Data Research 563, DIW Berlin, The German Socio-Economic Panel (SOEP).
  8. Fachinger, Uwe & Faik, Jürgen, 2010. "Ausgabenanalysen für Deutschland und Niedersachsen – Berechnungsergebnisse auf Basis der Einkommens‐ und Verbrauchsstichprobe 2003
    [Analysis of expenditures for Germany and Lower Saxony - Empi
    ," MPRA Paper 23269, University Library of Munich, Germany.
  9. Nicola Fuchs-Schündeln, 2008. "The Response of Household Saving to the Large Shock of German Reunification," Working Papers, Center for Retirement Research at Boston College wp2008-21, Center for Retirement Research, revised Dec 2008.

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