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Equivalence scales and consumption inequality: a study of household consumption patterns in italy

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  • Claudio Michelini

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Abstract

This paper utilises unit record survey data on expenditures and incomes of Italianhouseholds of different demographic profiles to estimate consumption equivalence scales whichmeasure the relative levels of spending required by households of different composition to attain givenlevels of utility. The equivalence scales have been obtained from the parameters of a few alternativeversions of a rank 3 complete demand system with demand shifters. Among the demographic variablesincluded in the models, the type of housing tenure and the age of children have special relevance. We have also computed the expenditure elasticities for the most common types of households and analysed how deflating expenditure with the equivalence scales affects consumption inequality amonghouseholds. The analysis is developed within the framework of hypothesised utility maximising behaviour of households.

Suggested Citation

  • Claudio Michelini, 1999. "Equivalence scales and consumption inequality: a study of household consumption patterns in italy," Departmental Working Papers 1999-02, Department of Economics, Management and Quantitative Methods at Universit√† degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:1999-02
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    File URL: http://wp.demm.unimi.it/files/wp/1999/DEMM-1999_002wp.pdf
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    References listed on IDEAS

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    1. Michelini, Claudio, 1999. "The estimation of a rank 3 demand system with demographic demand shifters from quasi-unit record data of household consumption," Economics Letters, Elsevier, vol. 65(1), pages 17-24, October.
    2. Ray, Ranjan, 1983. "Measuring the costs of children : An alternative approach," Journal of Public Economics, Elsevier, pages 89-102.
    3. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    4. Lewbel, Arthur, 1991. "The Rank of Demand Systems: Theory and Nonparametric Estimation," Econometrica, Econometric Society, vol. 59(3), pages 711-730, May.
    5. John Muellbauer, 1975. "Aggregation, Income Distribution and Consumer Demand," Review of Economic Studies, Oxford University Press, vol. 42(4), pages 525-543.
    6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, pages 312-326.
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    Cited by:

    1. Shahateet, Mohammed & Al-Tayyeb, Saud, 2007. "Regional consumption inequalities in Jordan: Empirical study," MPRA Paper 57400, University Library of Munich, Germany.

    More about this item

    Keywords

    Equivalence scales; Rank 3 demand systems; Income inequality.;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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