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Semiparametric Estimation of Consumption Based Equivalence Scales: The Case of Germany

  • Wilke, Ralf A.

Consumption based equivalence scales are estimated by applying the extended partially linear model (EPLM) to the 1998 Income and Consumption Survey (EVS) carried out in Germany. In this model the equivalence scales are identified by virtue of nonlinearities in household demand. Therefore, the econometric framework should not impose any strong restrictions on the functional forms of household expenditure shares. The chosen semiparametric specification meets this requirement. It is flexible, it yields N-consistent parameter estimates, and is consistent with consumer theory. Estimated equivalence scales are below or in the range of the expert equivalence scales of the German social benefits system.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-53 [rev.].

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Date of creation: 2005
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Handle: RePEc:zbw:zewdip:7179
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  1. Pendakur, Krishna, 1998. "Semiparametric estimates and tests of base-independent equivalence scales," Journal of Econometrics, Elsevier, vol. 88(1), pages 1-40, November.
  2. Richard Blundell & Martin Browning & Ian Crawford, 1998. "Nonparametric Engel Curves and Revealed Preference," Discussion Papers 99-07, University of Copenhagen. Department of Economics.
  3. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
  4. Bellemare, C. & Melenberg, B. & van Soest, A.H.O., 2002. "Semi-parametric Models for Satisfaction with Income," Discussion Paper 2002-87, Tilburg University, Center for Economic Research.
  5. Wilke, Ralf A., 2003. "Semiparametric Estimation of Regression Functions Under Shape Invariance Restrictions," ZEW Discussion Papers 03-64, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Pendakur, K., 1999. "Semiparametric Estimation of Lifetime Equivalence Scales," Discussion Papers dp99-9, Department of Economics, Simon Fraser University.
  7. Stengos, T. & Sun, Y. & Wang, D., 2003. "Estimates of Semiparametric Equivalence Scales," Working Papers 2003-7, University of Guelph, Department of Economics and Finance.
  8. 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.
  9. Karsten Kohn & Martin Missong, 2003. "Estimation of Quadratic Expenditure Systems Using German Household Budget Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 223(4), pages 422-448, July.
  10. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-82, September.
  11. Richard Blundell & Alan Duncan & Krishna Pendakur, 1998. "Semiparametric estimation and consumer demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(5), pages 435-461.
  12. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  13. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, vol. 87(347), pages 460-87, September.
  14. repec:dgr:kubcen:200287 is not listed on IDEAS
  15. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-99, September.
  16. Lluch, Constantino, 1973. "The extended linear expenditure system," European Economic Review, Elsevier, vol. 4(1), pages 21-32, April.
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