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A true cost of living index for Spain using a microeconomic approach and censored data

Author

Listed:
  • Elena Lasarte Navamuel

    (REGIOLab, University of Oviedo - Spain)

  • Dusan Paredes

    (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)

  • Esteban Fernández Vázquez

    (REGIOLab, University of Oviedo - Spain)

Abstract

A true Cost of Living (COL) index measures the expenditure ratio of maintaining a utility level for two price vectors. Its application and empirical testing has been, generally, focalized on a temporal perspective. The aim of this paper is to calculate a spatial COL for the regions of Spain. For this purpose, we will use the microdata from the 2010 Households Budget Survey (EPF, Encuesta de Presupuestos Familiares) provided by the Spanish Statistical Institute (INE, Instituto Nacional de Estadística). We will denominate this index Spatial Cost of Living Index (SCOL). This type of analysis is not usually made by the national statistical agencies and Spain is not an exception. We use a microeconomic approach that keeps the households’ level of utility constant and allows substitution among different baskets of goods across space. The results reveal large differences in SCOL across the Spanish regions. The estimates of the SCOL index allows for reconsidering regional comparisons in terms of average wages. Even when nominal monetary magnitudes for Regional Accounts show great regional disparities, regional differences are largely moderated when the wage figures are corrected by our SCOL.

Suggested Citation

  • Elena Lasarte Navamuel & Dusan Paredes & Esteban Fernández Vázquez, 2012. "A true cost of living index for Spain using a microeconomic approach and censored data," Documentos de Trabajo en Economia y Ciencia Regional 26, Universidad Catolica del Norte, Chile, Department of Economics, revised Aug 2012.
    • Handle: RePEc:cat:dtecon:dt201212
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    File URL: https://sites.google.com/a/ucn.cl/wpeconomia/archivos/WP2012-12.pdf
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    References listed on IDEAS

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    Cited by:

    1. Martijn Burger & Martijn Hendriks & Elena Ianchovichina, 2022. "Happy but Unequal: Differences in Subjective Well-Being across Individuals and Space in Colombia," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(3), pages 1343-1387, June.
    2. Elena Lasarte Navamuel & Fernando Rubiera Moroll & Dusan Paredes, 2014. "City size and household food consumption: demand elasticities in Spain," Applied Economics, Taylor & Francis Journals, vol. 46(14), pages 1624-1641, May.
    3. Elena Lasarte Navamuel & Esteban Fernández Vázquez & Fernando Rubiera Morollón, 2017. "Higher cost of living in urban areas? An AIDS-based analysis of food in Spain," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1665-1677, November.
    4. Pablo Gálvez & Petr Mariel & David Hoyos, 2016. "Análisis de la demanda residencial de los servicios básicos en España usando un modelo QUAIDS censurado," Estudios de Economia, University of Chile, Department of Economics, vol. 43(1 Year 20), pages 5-28, June.
    5. Cortes, Darwin & Gallegos, Andrés & Perez Perez, Jorge, 2021. "The Spending Responses to Adverse Health Shocks: Evidence from a Panel of Colombian Households," SocArXiv vh2qa, Center for Open Science.

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    More about this item

    Keywords

    Spatial cost of living index; AIDS; two-stepestimation for censored data; Spain;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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