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Subjective poverty equivalence scales for Euro Zone countries

Author

Listed:
  • Ismael Ahamdanech-Zarco

    (Department of Economics, East Carolina University)

  • John A. Bishop

    () (Department of Economics, East Carolina University)

  • Andrew Grodner

    (Department of Economics, East Carolina University)

  • Haiyong Liu

    (Department of Economics, East Carolina University)

Abstract

While the idea behind subjective equivalence scales is generally attractive, subjective scales have been plagued by problems of inconsistency. We address this problem with new European Income and Living Conditions (SILC) datasets that are much larger in size than those available to previous researchers. We estimate subjective equivalence scales for the whole Euro Zone as well as its individual constituent countries. Our subjective scales increase consistently with household size. More importantly, we find that adding the first child is more costly than adding a third adult and that the marginal cost of children declines. Comparing modified OECD scale poverty rates to our subjective poverty rates (holding the overall poverty rate constant) we find that the subjective scales ‘redistribute poverty’ away from larger to smaller households.

Suggested Citation

  • Ismael Ahamdanech-Zarco & John A. Bishop & Andrew Grodner & Haiyong Liu, 2011. "Subjective poverty equivalence scales for Euro Zone countries," Working Papers 233, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2011-233
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2011-233.pdf
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    References listed on IDEAS

    as
    1. Federico Perali & Martina Menon, 2009. "Econometric Identification of the Cost of Maintaining a Child," Working Papers 63/2009, University of Verona, Department of Economics.
    2. de Vos, Klaas & Zaidi, M Asghar, 1997. "Equivalence Scale Sensitivity of Poverty Statistics for the Member States of the European Community," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(3), pages 319-333, September.
    3. Olken, Benjamin A., 2005. "Revealed community equivalence scales," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 545-566, February.
    4. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 11(3), pages 337-369.
    5. van Praag, Bernard M S & Hagenaars, Aldi J M & van Weeren, Hans, 1982. "Poverty in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 28(3), pages 345-359, September.
    6. John A. Bishop & Feijun Luo & Xi Pan, 2006. "Economic Transition And Subjective Poverty In Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(4), pages 625-641, December.
    7. Thesia I. Garner & Kathleen Short, 2005. "Personal Assessments of Minimum Income and Expenses: What Do They Tell Us about 'Minimum Living' Thresholds and Equivalence Scales?," Working Papers 379, U.S. Bureau of Labor Statistics.
    8. Andrea Brandolini, 2006. "Measurement of Income Distribution in Supranational Entities: The Case of the European Union," LIS Working papers 452, LIS Cross-National Data Center in Luxembourg.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    poverty; equivalence scales; subjective method; eurozone.;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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