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Semi-parametric estimation of consumption-based equivalence scales: the case of Germany

Listed author(s):
  • Ralf A. Wilke

    (Centre for European Economic Research, ZEW Mannheim, Germany)

Consumption-based equivalence scales are estimated by applying the extended partially linear model (EPLM) to the 1998 German Income and Consumption Survey (EVS). In this model the equivalence scales are identified from nonlinearities in household demand. The econometric framework should not therefore impose strong restrictions on the functional forms of household expenditure shares. The chosen semi-parametric specification meets this requirement. It is flexible, it yields $\sqrt{N}$ -consistent parameter estimates and it is consistent with consumer theory. Estimated equivalence scales are below or in the range of the expert equivalence scales of the German social benefits system. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.888
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File URL: http://qed.econ.queensu.ca:80/jae/2006-v21.6/
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 21 (2006)
Issue (Month): 6 ()
Pages: 781-802

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Handle: RePEc:jae:japmet:v:21:y:2006:i:6:p:781-802
DOI: 10.1002/jae.888
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  1. Yiguo Sun & Thanasis Stengos & Dianqin Wang, 2006. "Estimates of semiparametric equivalence scales," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(5), pages 629-639.
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  3. Charles Bellemare & Bertrand Melenberg & Arthur van Soest van Soest, 2002. "Semi-parametric models for satisfaction with income," CeMMAP working papers CWP12/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  4. Pendakur, Krishna, 1998. "Semiparametric estimates and tests of base-independent equivalence scales," Journal of Econometrics, Elsevier, vol. 88(1), pages 1-40, November.
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  7. Wilke, Ralf A., 2003. "Semiparametric Estimation of Regression Functions Under Shape Invariance Restrictions," ZEW Discussion Papers 03-64, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Richard Blundell & Alan Duncan & Krishna Pendakur, 1998. "Semiparametric estimation and consumer demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 435-461.
  9. Lluch, Constantino, 1973. "The extended linear expenditure system," European Economic Review, Elsevier, vol. 4(1), pages 21-32, April.
  10. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, vol. 87(347), pages 460-487, September.
  11. 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.
  12. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-597, June.
  13. Kohn Karsten & Missong Martin, 2003. "Estimation of Quadratic Expenditure Systems Using German Household Budget Data / Schätzung Quadratischer Ausgabensysteme anhand der Daten der Einkommens- und Verbrauchsstichprobe," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(4), pages 422-448, August.
  14. 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, vol. 102(414), pages 1067-1082, September.
  15. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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