Equivalence Scales Declining with Expenditure: Evidence and Implications for Income Distribution
We estimate expenditure dependent equivalence scales for Italian couples with and without children. Following Donaldson and Pendakur (2006) we incorporate the generalized absolute equivalence-scale exactness (GAESE) restrictions into a translated quadratic almost ideal (TQAI) demand system. We obtain declining with expenditure scales, a pattern that tends to strengthen when the number of children increases. This implies that scale economies in current consumption are lower for families with poor expenditure capacities. We also show that families living in the South and the Islands suffer a substantial additional cost to achieve, ceteris paribus, the same well-being of those living in the North. Finally, we find that ignoring the declining with expenditure pattern results in a relevant understatement of measured inequality.
|Date of creation:||May 2011|
|Contact details of provider:|| Postal: Piazza S.Francesco,7 - 53100 Siena|
Web page: http://www.deps.unisi.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Federico Perali & Martina Menon, 2009. "Econometric Identification of the Cost of Maintaining a Child," Working Papers 63/2009, University of Verona, Department of Economics.
- Koulovatianos, Christos & Schroder, Carsten & Schmidt, Ulrich, 2005. "On the income dependence of equivalence scales," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 967-996, June.
- J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
- Donaldson, David & Pendakur, Krishna, 2006. "The Identification of Fixed Costs From Consumer Behavior," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 255-265, July.
- Arthur Lewbel, 2003. "A rational rank four demand system," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(2), pages 127-135.
- Douglas W. Allen, 2007. "The Effect on Divorce of Legislated Net-Wealth Transfers," Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 580-597, October.
- 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.
- Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005.
"Properties of Equivalence Scales in Different Countries,"
Journal of Economics,
Springer, vol. 86(1), pages 19-27, October.
- Christos Koulovatianos & Carsten Schröder & Ulrich Schmidt, 2005. "Properties of Equivalence Scales in Different Countries," Vienna Economics Papers 0503, University of Vienna, Department of Economics.
- Lewbel, Arthur, 2003.
"Calculating compensation in cases of wrongful death,"
Journal of Econometrics,
Elsevier, vol. 113(1), pages 115-128, March.
- Arthur Lewbel, 2002. "Calculating Compensation in Cases of Wrongful Death," Boston College Working Papers in Economics 523, Boston College Department of Economics, revised 07 Jun 2002.
- Fabrizio Balli & Silvia Tiezzi, 2010. "Equivalence scales, the cost of children and household consumption patterns in Italy," Review of Economics of the Household, Springer, vol. 8(4), pages 527-549, December.
- Donaldson, David & Pendakur, Krishna, 2004. "Equivalent-expenditure functions and expenditure-dependent equivalence scales," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 175-208, January.
- Lewbel, Arthur, 1989. "Household equivalence scales and welfare comparisons," Journal of Public Economics, Elsevier, vol. 39(3), pages 377-391, August.
- Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
When requesting a correction, please mention this item's handle: RePEc:usi:wpaper:611. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabrizio Becatti)
If references are entirely missing, you can add them using this form.