The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates

Rolf Aaberge, Audun Langørgen, Magne Mogstad and Marit Østensen
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Marit Østensen: Statistics Norway, https://www.ssb.no/en/forskning/ansatte

Discussion Papers from Statistics Norway, Research Department

Abstract: Despite a broad consensus on the need to account for the value of public services and geographical cost of living differences on the measurement of poverty, there is little reliable evidence on how these factors actually affect poverty estimates. Unlike the standard approach in studies of the distribution of public services, this paper employs a method for valuing sector-specific local public services that accounts for differences between municipalities in the costs and capacity to produce public services. Furthermore, recipient frequencies in various demographic groups are used as the basis for determining the allocation of the value of these services on citizens of the municipalities. Geographical differences in living costs are accounted for by using municipal housing price indices or by replacing the country-specific poverty line with municipal-specific poverty lines. Applying Norwegian register data for the period 1993-2001, we find that disregarding the value of local public services and geographic cost of living differences yields a misleading picture of poverty.

Keywords: Poverty; public services; in-kind transfers; geographical cost of living differences; housing price indices; municipal-specific poverty lines (search for similar items in EconPapers)
JEL-codes: D31 H72 I30 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (3)

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Working Paper: The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:551

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