In the measurement of inequality, adjustments for differences across households in their demographic composition and in the price regimes they face are usually very simple. Often, nominal income is adjusted with an income-independent price deflator and a price-independent equivalence scale. I show that using more flexible income-dependent price deflators and price-dependent equivalence scales affects the level of, and trend in, measured consumption inequality in Canada over 1978-1996. Whereas standard methods show a large increase in inequality over the eraly 1980s and a decrease over the mid 1990s, more flexible methods show a smaller increase over the early 1980s and no decrease over the mid 1990s.
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Paper provided by Department of Economics, Simon Fraser University in its series Discussion Papers with number
dp99-7.
Length: 30 pages Date of creation: 1999 Date of revision: Handle: RePEc:sfu:sfudps:dp99-7
Contact details of provider: Postal: Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada Phone: (778)782-3508 Fax: (778)782-5944 Web page: http://www.econ.sfu.ca/ More information through EDIRC
Find related papers by JEL classification: D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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