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Using Panel Data on Income Satisfaction to Estimate the Equivalence Scale Elasticity

  • Schwarze, Johannes

    (University of Bamberg)

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    In this paper a new method to estimate the equivalence scale elasticity using individual panel data on income satisfaction will be developed. In contrast to other subjective approaches, the present one benefits from the fact that no direct cardinal individual welfare function has to be specified. In addition, panel data enables different scale use by the respondents to be controlled. The approach gives straightforward evidence: Obviously there is an optimal elasticity at which people feel satisfied with their income.

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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 224.

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    Length: 20 pages
    Date of creation: Dec 2000
    Date of revision:
    Publication status: published in: Review of Income and Wealth, 2003, 49 (3), 359-372
    Handle: RePEc:iza:izadps:dp224
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    1. Adriana D. Kugler & Gilles Saint Paul, 2000. "Hiring and firing costs, adverse selection and long-term unemployment," Economics Working Papers 447, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Bell, David N.F. & Hart, Robert A. & Hübler, Olaf & Schwerdt, Wolfgang, 2000. "Paid and Unpaid Overtime Working in Germany and the UK," IZA Discussion Papers 133, Institute for the Study of Labor (IZA).
    3. Barrett, Alan & O'Connell, Philip J., 2000. "Is There a Wage Premium for Returning Irish Migrants?," IZA Discussion Papers 135, Institute for the Study of Labor (IZA).
    4. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
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