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Equivalence scales for extended income in the U.S

Author

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  • Nancy Folbre

    (Political Economy Research Institute, University of Massachusetts Amherst)

  • Marta Murray-Close

    (University of Massachusetts Amherst)

  • Jooyeoun Suh

    (Centre for Time Use Research, University of Oxford)

Abstract

Estimates of extended household income (the sum of market income and the imputed value of non-market household production) should adjust for differences in household size and composition using equivalence scales. However, the equivalence parameters traditionally applied to market income do not plausibly apply to non-market income. Economies of scale in the relationship between living standards and household income are greater for non-market income from household production than market income, and the costs of children relative to adults are higher in household production time than in cash expenditures. Also, the presence of a full-time family caregiver significantly reduces cash expenditures on child care. This paper proposes equivalence scales that can be separately applied to the components of extended income, and demonstrates their empirical relevance with pooled data from the American Time Use Survey for 2010–2014. The proposed parameters significantly alter the relative contribution of non-market income to extended income and modify comparisons of extended income across different family household types, with particularly significant implications for the relative well-being of those with and without full-time family caregivers.

Suggested Citation

  • Nancy Folbre & Marta Murray-Close & Jooyeoun Suh, 2018. "Equivalence scales for extended income in the U.S," Review of Economics of the Household, Springer, vol. 16(2), pages 189-227, June.
  • Handle: RePEc:kap:reveho:v:16:y:2018:i:2:d:10.1007_s11150-017-9387-8
    DOI: 10.1007/s11150-017-9387-8
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