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Subjective poverty equivalence scales for Euro Zone countries

  • 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)

Registered author(s):

    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.

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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2011-233.pdf
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    Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 233.

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    Length: 20 pages
    Date of creation: 2011
    Date of revision:
    Handle: RePEc:inq:inqwps:ecineq2011-233
    Contact details of provider: Web page: http://www.ecineq.org
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    1. 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 345-59, September.
    2. Federico Perali & Martina Menon, 2009. "Econometric Identification of the Cost of Maintaining a Child," Working Papers 63/2009, University of Verona, Department of Economics.
    3. Andrea Brandolini, 2007. "Measurement of income distribution in supranational entities: the case of the European Union," Temi di discussione (Economic working papers) 623, Bank of Italy, Economic Research and International Relations Area.
    4. repec:ner:tilbur:urn:nbn:nl:ui:12-361898 is not listed on IDEAS
    5. 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.
    6. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 11(3), pages 337-369.
    7. 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 319-33, September.
    8. 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.
    9. Olken, Benjamin A., 2005. "Revealed community equivalence scales," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 545-566, February.
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